Equilibrium quantity, Managerial Economics

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.

Posted Date: 3/9/2013 5:30:25 AM | Location : United States







Related Discussions:- Equilibrium quantity, Assignment Help, Ask Question on Equilibrium quantity, Get Answer, Expert's Help, Equilibrium quantity Discussions

Write discussion on Equilibrium quantity
Your posts are moderated
Related Questions
The market demand for brand X has been estimated as Qx=1500-3Px-0.05I-2.5Py+7.5Pz

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


What is Cyert and March's behavior theory? What are the demerits.

Q. Proportion of Income Spent on a Commodity? Another characteristic that has an impact on the elasticity of demand for a commodity is proportion of income that consumers use u

Discuss the applications of Managerial economics concepts or theories in managerial decision making question..

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

Q. Types of Market Structures by the Nature of Competition? Conventionally, the nature of competition is assayed to be the basic criterion for distinguishing different types of

"Inflation is not possible under the gold standard." Is this declaration true, false, or uncertain? Describe your answer

Importance of Income Elasticity If a country is experiencing economic growth, the income of the people will increase.  However, for those engaged in the production of goods wi