A one-price monopolist faces a demand of P = 107 – 0.015Q and has a total cost function C(Q) = 5000ln(Q) + 30Q. a) Calculate the profit of the monopolist b) Prove that regulating the monopoly to produce with no deadweight loss will drive them out of business.
A one-price monopolist faces a demand of P = 107 – 0.015Q and has a total cost function C(Q) = 5000ln(Q) + 30Q.
a) Calculate the profit of the monopolist
b) Prove that regulating the monopoly to produce with no deadweight loss will drive them out of business. Use elements from the calculations here to find the deadweight loss with a monopoly
c) Draw a picture as part of an explanations why the regulator may choose a price ≈ 39.33. Find the new DWL at this level of production
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