Monopoly without tax and without price ceiling, Macroeconomics

Here from a), profit maximizing price = 7 and Q = 10. It is shown in the figure below:-

148_Monopoly without tax.png

The consumer surplus is shown in blue area which is given as (9-7) *10*1/2 =10 dollar.

 Monopoly with tax of 50 cents per unit

Here from c), profit maximizing price = 7.25 and Q = 8.75. It is shown in the figure below:-

108_consumer surplus.png

The consumer surplus is shown in blue area which is given as (9-7.25 ) *8.75*1/2 =7.65625 dollar.

 
Monopoly without tax, but with price ceiling of $6

Here from d), profit maximizing price = 7.5 and Q = 7.5. It is shown in the figure below:-

The consumer surplus is shown in blue area which is given as (9-7.5 ) *7.5*1/2 =5.625 dollar.
* Perfectly competitive industry

In case of perfectly competitive,

MC = D

ð  5 = 45-5P

ð  P = 8

And Q from equn i) is 5

So consumer surplus = ½ * (9-5)*5 =10 dollar.

Posted Date: 3/7/2013 4:29:32 AM | Location : United States







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