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Monopolist is regulated to charge

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Reference no: EM13151951 , Length: 407 words

3. Assume a monopolist who sells a product with a total cost function C= -100Q + 15Q2. The market demand is given by the equation P=300-Q. 
a. What is the unregulated monopoly quantity and price? 

b. Is the monopolist making a profit or loss? How much is the profit or loss?

c. Suppose the monopolist is regulated to charge a rate which covers all unit cost and total cost, what is this rate and how many units will the monopolist produce?

d. If the regulatory agency desires for the monopolist to produce the socially optimal quantity and rate (price), what would they respectively be?

e. Which form of monopoly regulation most commonly used and why?

Reference no: EM13151951

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