Monopolist choice of quality efficient

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Monopoly, welfare and quality choice.

A monopolist can produce a high quality product and face demand of Q = 60-½ P, Marginal cost = 12 and Fixed cost = 800 or a low quality product and face demand of Q = 60-P, Marginal cost = 4 and Fixed cost equal 100.

a) Will the monopolist choose high quality or low quality?

b) If monopoly pricing is assumed then is the monopolist's choice of quality efficient?

Reference no: EM132389368

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