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Welfare cost of this rent seeking activity

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Reference no: EM131515648

Microeconomics - Externalities Question

The demand for gummy bears is given by Q = 200 - 100P and these confections can be produced at a constant marginal cost of $0.50.

a. How much will sweet tooth inc be willing to pay in bribes to obtain a monopoly concession from the government for gummy bear production?

b. Do the bribes represent a welfare cost from rent seeking?

c. What is the welfare cost of this rent seeking activity?

Reference no: EM131515648

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