What is the desirability for regulation for each value of f

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Reference no: EM131290770

Suppose that the market demand curve is P = 50-Q and the cost function for each firm is C = 10q + f.

a) For f equals 1, 10, and 100, find:

i) The total surplus if there is a single supplier required to meet demand at a regulated price that equals average cost of the monopolist.
ii) The total surplus if the unregulated market structure is the Cournot free-entry equilibrium.

iii) The total surplus if there is an unregulated monopolist.

b) Suppose that the administrative cost of regulation in (i) amounts to 10% of the total surplus. Taking this into account, what is the desirability for regulation for each value of f?

Reference no: EM131290770

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