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Consider an industry with a sole producer, a monopolist. The latter faces cost function C(Q)= Q/2 and aggregate (inverse) demand P(Q)=1 - Q (zero for Q> 1). Illustrate all your answers in a drawing
(a) What are the equilibrium quantity QM, price PM, pro?ts ΠM, consumer surplus CSM and total welfare WM for the case of non-discriminatory (uniform) pricing.
(b) Explain why for effciency, i. e. maximal total welfare, it must be the case that price equals marginal cost. Using this, compute the effcient quantity Q*.
(c) Finally, quantify the social cost arising from the monopoly by calculating the associated deadweight loss, telling you by how much the monopoly industry falls short of effciency.
what is the theory of firm?
The production function is Q= 20 K0.5 L0.5 Question: For the production function Q= 20 K0.5 L0.5 determine four combinations of capital and labor that will produce 100 and 200 unit
Direct intervention The government can also intervene directly in the economy to see that its wishes are carried out. This can be achieved thorough: a. Price and i
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When is production profitable according to price-taking firm at profit, break-even or loss? Production profitable at profit, break-even or loss: a. When TR > TC, in that cas
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In the country of Sleep-well, the inhabitants' main activity is... sleeping. Despite the loss of productivity that this entails, the country has a profuse and renowned production o
Question: Discuss the pricing practices adopted by firms under different market structures. OR A firm produces a good, which is sold on delivery and in restaurants. The d
define scarcityand oppurtunity cost.show how these concepts are useful in managerial decision making
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