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

#question.meaning of isoquants and its types

ROLE OF SCARCITY IN MANAGEMENT DECISION MAKING

Economies and diseconomies of scale are of two types- external andinternal. Internal economies and diseconomies are those which a firm reaps as a result of its own expansion. Conve

Suppose that Betsy's utility function is given by the equation U=Y0.3 where Y is calculated in thousands of dollars. Betsy's present job pays her $20,000 (Y=20) per year and she ca


To what extent has the IMF achieved its objectives? The objective of achieving full convertibility of currencies has not been achieved.  In the first place countries impose re

Practical Importance of the knowledge of Price Elasticity of demand The practical importance of the measures of elasticity of demand is to be appreciated in various ways:

Q. Explain about Delphi method? Delphi method: This is a systematic, interactive forecasting method that depends on a panel of experts. Experts answer questionnaires in two o

Bank Deposit Bank notes and coins together constitute the currency in circulation.  But they form only a part of the total money supply.  The larger part of the money supply i