A monopolist has marginal cost c>0 and Fixed cost F > 0 and faces demand p = bet

Question

A monopolist has marginal cost c>0 and Fixed cost F > 0 and faces demand p = beta>0. (a) Solve for the monopolist½s output, price, and pro?t. (b) Calculate the deadweight loss and show that it is positive. (c) If the government requires the ?rm to set a price that maximizes the sum of consumers½ and producer½s surplus and to serve all buyers at that price, what is price must it charge? Show that since the ?rm½s pro?t is negative under this regulation, it is not sustainable in the long run. betaF, and alpha ? c)2 > 4alpha > c and ( betay , where alpha ?

Explanation / Answer

a.

MR = 520

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