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What is university h new profit at the equilibrium

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Imagine a university H that is the monopoly in the market for art degrees, with cost function C(Q) = 25Q^2 + 360. Imagine the inverse demand function for art degrees is p(Q) = 400 - 25Q. The government has decided it would ensure that there is no deadweight loss in this market for art degrees by setting a price cap on university H.

-What would be the equilibrium price and equilibrium quantity if the government did not impose a price cap and university H was able to operate as an un-regulated monopoly?

-At what optimal price should the government cap art degree sales?

-What are the new post-price cap equilibrium price and equilibrium quantity?

-What is University H's new profit at the equilibrium?

-Prove that this new profit level is a global maximum

-Show the new equilibrium price and equilibrium quantity graphically. Include the original and regulated inverse demand curves, the university's marginal revenue curve, and the university's marginal cost curve.

-What are consumer surplus, producer surplus, and deadweight loss at the equilibrium? How do these values compare to the case of the un-regulated monopoly?

Reference no: EM132789942

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