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##### consider a monopolist withe total cost function

**Description**

solution

**Question**

consider a monopolist withe total cost function;TC(Q)=Q2/2+10Q+20;facing the market demand equation Q=70-P;a)What is the profit-maximizing output for the monopolist? Calculate its profit.;b) What is the socially optimal output and price for this firm?;c) What is the dead weight loss generated by the monopolist?;d) Suppose now that the monopolist is charged a profit tax of 25%. What is the profit maximizing output in this case? Compare this to what you obtained in part a). Explain any similarities/differences.;e) Suppose the monopolist is charged a quantity tax instead. For what(nonzero) value(s) of the quantity tax will this tax system be equivalent to the profit tax system given in (d)? Here we define two tax systems to be equivalent if they result in the monopolist producing the same output. Justify your answer.;f) Now suppose there are no taxes and the firm is a perfect price-discriminating monopolist. Calculate equilibrium output and quantity.;g) Is there any deadweight loss in the case presented in part (f)? How is it different from the perfectly competitive outcome?

Paper#29520 | Written in 18-Jul-2015

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