Question
A monopolist producer faces the inverse demand curve gi- 250-Q, where P is the price charged and O is the quantity den total cost of producing the good is C(Q) = 50+50Q.
a) Find the profit-maximizing price and quantity, P and Q
b) Calculate the deadweight loss of this monopoly.
c) Suppose a per-unit tax of t is imposed on each unit produce the monopoly. Calculate the new price P** that maximizes monopoly's profit as a function of t and the derivative dP- What economic interpretation can you attach to this derivat Explain!
a) Find the profit-maximizing price and quantity, P and Q
b) Calculate the deadweight loss of this monopoly.
c) Suppose a per-unit tax of t is imposed on each unit produce the monopoly. Calculate the new price P** that maximizes monopoly's profit as a function of t and the derivative dP- What economic interpretation can you attach to this derivat Explain!