What is socially efficient amount for GE to make and sell

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General Electric develops a new type of high-tech MRI machine. GE has a patent on the machine and therefore is essentially a monopolist. After hiring consultants to study the market,GE’s best estimate of the potential demand among hospitals and physicians for the new MRI machine is described by Q =1000– P. Their marginal costs of making each unit are described by MC = 200 +0.5Q.a. Graph the MC, MR, and Demand Curves. You must label the intercepts on the vertical and horizontal axes b. How many machines does General Electric decide to make and sell?Hint: Recall that a monopolist maximizes profits by setting quantity where marginal cost are equal to marginal revenue c. What is the socially efficient amount for GE to make and sell? d. Conceptually, what makes the amount chosen by GE in part b. socially inefficient? (one or two sentences)

Reference no: EM131196940

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