Equilibrium quantity, Managerial Economics

Assignment Help:

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.


Related Discussions:- Equilibrium quantity

Explain what is meant by price discrimination, Problem 1: a) Explain wh...

Problem 1: a) Explain what is meant by ‘price discrimination' and what are the different types of price discrimination. b) Under what conditions is it possible and profitabl

Show normal profit equilibrium, Q. Show Normal profit equilibrium? Nor...

Q. Show Normal profit equilibrium? Normal Profits: With the condition of  MC = MR and MC cuts the MR from below, if E is the point of stable equilibrium, output of firm is OM

#Principles and Practicices of Management, How will you influence people to...

How will you influence people to strive willingly for group objective in your organization (target based industry)? Apply your interpersonal influence through communication process

Arguments for uneven distribution of income and wealth, Arguments for Uneve...

Arguments for Uneven Distribution of Income and Wealth The basic economic argument to justify large income inequality was the assumption that high personal and corporate income

Williamson model of managerial discriation, how equilibrium output can be...

how equilibrium output can be find in williamson model

CASE LET, is indian companies running a risk by not giving attention to cos...

is indian companies running a risk by not giving attention to cost cutting?

#Demand function.., Calculate point elasticity of demand for demand functio...

Calculate point elasticity of demand for demand function Q=10-2p for decrease in price from Rs. 3 to 2

Disadvantages of mixed economy, Disadvantages of Mixed Economy Large m...

Disadvantages of Mixed Economy Large monopolies can still exist in the private sector, and so competition does not really take place There is likely to be a lot of bureaucr

Calculate the firms short-run total cost curve, A firm producing hockey sti...

A firm producing hockey sticks has a production function given by X = 2 KL In the short-run, the firm's amount of capital equipment is fixed at K = 1000. The rental rate fo

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd