market demand
A monopoly faces market demand Q=30-P and has cost function C(Q)=”/2(A) Find
the profit maximizing price and quantity and the resulting profit(B) If the government forced this monopolist to act like a perfect competitor, what would
be the P and Q?(C) Calculate CS, PS for the monopolist when acting like a monopolist and when acting as aperfect competitor.
(D) Compute the DWL AND show it in a diagram(E) Assume that the government puts a price ceiling on the monopolist at P=18. How muchoutput will the monopolist produce? What will be the profit of the monopolist?Calculate CS, PS and DWL again. Why is the DWL different now?(F) Assume that the government put a price ceiling on the monopolist in order to maximizethe totalwelfare (CS +PS). What price ceiling should it choose? How much output willthe monopolist produce at this price ceiling? What will the profit of the monopolist be?What is the DWL?
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