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Question: Monopoly, standard case. Suppose Kaiser Permanente holds a monopoly on health services in the Oakland area. Its total cost of providing health services is given by T C(Q) = 25Q + 2Q2 , where Q represents the number of health services provided. The local market demand for these services is given by QD = 500 - 2P.
(a) What quantity of services will Kaiser choose to produce?
(b) What is Kaiser Permanente's Lerner Index?
(c) Calculate the size of the deadweight loss associated with the monopoly.
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