(a) (3 points)What is the level of price, output, and amount of profit for an un
ID: 2495222 • Letter: #
Question
(a) (3 points)What is the level of price, output, and amount of profit for an unregulated monopolist?
(b) (3 points) Using the data in the table, what is the price, output, and profit for a regulated monopolist that sets price equal to marginal cost compared with an unregulated monopolist?
(c) (3 points) Using the data in the table, what is the price, output, and profit for a regulated monopolist that charges a "fair-return" price compared with an unregulated monopolist
000000050 460281456 433445555 004000603 003005853 0308777 7665555 ae 80246208 7642 3 e-0000000000 ic 0 0 0 0 0 0 0 0 0 0 5 6 7 8 9 0 1 2 3 4 | 0 9 8 7 6 6 5 4 3 2 na 0 1 2 3 4 5 6 7 8 9 teExplanation / Answer
(a) Unregulated monopoly
MC = MR
Q=4, P=69,
Profit = 4*69 - 4*63 = 24
(b) Regulated Monopoly
Where MC = AR (price) = 51
Q=6, P =51
Profit = 6*51 - 6*58.5 = -45 (loss)
(c) For fair return the monopolist is regulated to produce at its breakeven point it will produce that quantity where ATC crosses the demand curve
AC = AR
Q=5, P=60
Profit = 5*60 - 5-60 = 0
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.