2. A monopolist has a cost function given by C(y)=y² +12 and faces a demand curve given by P(y) = 24-y. (a) What is the profit maximising level of output and price charged by the monopolist? Show your calculations. (b) If you impose a lump sum tax of £100 on this monopolist, what would be the impact on output? Explain your calculations and your result. (c) If you wanted to price regulate this monopolist so as to maximise consumer plus producer surplus, what price ceiling would you impose? How much output will the monopolist produce at this price ceiling? Explain your calculations.
2. A monopolist has a cost function given by C(y)=y² +12 and faces a demand curve given by P(y) = 24-y. (a) What is the profit maximising level of output and price charged by the monopolist? Show your calculations. (b) If you impose a lump sum tax of £100 on this monopolist, what would be the impact on output? Explain your calculations and your result. (c) If you wanted to price regulate this monopolist so as to maximise consumer plus producer surplus, what price ceiling would you impose? How much output will the monopolist produce at this price ceiling? Explain your calculations.
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.2P
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