A. A Monopolist producing and supplying cooking gas to Mombasa city faces the demand function. Q = 8800 – 20P. Its cost function is given by TC = 20Q + 0.05Q2 .i. Determine the quantity of cooking gas she will produce and the price she will charge to maximize profits and determine her profit. ii. Explain how her profits will be affected if regulators forced her to operate like a perfectly competitive firm. iii. Illustrate and compute deadweight loss and lost consumer surplus associated with her Monopoly operations.
A. A Monopolist producing and supplying cooking gas to Mombasa city faces the demand function. Q = 8800 – 20P. Its cost function is given by TC = 20Q + 0.05Q2 .i. Determine the quantity of cooking gas she will produce and the price she will charge to maximize profits and determine her profit. ii. Explain how her profits will be affected if regulators forced her to operate like a perfectly competitive firm. iii. Illustrate and compute deadweight loss and lost consumer surplus associated with her Monopoly operations.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter9: Monopoly
Section: Chapter Questions
Problem 19SQ
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Transcribed Image Text:Question Three
A. A Monopolist producing and supplying cooking gas to Mombasa city faces the demand
function.
Q= 8800 – 20P. Its cost function is given by TC = 20Q + 0.05Q2
.i. Determine the quantity of cooking gas she will produce and the price she will charge to
maximize profits and determine her profit.
ii. Explain how her profits will be affected if regulators forced her to operate like a perfectly
competitive firm.
iii. Illustrate and compute deadweight loss and lost consumer surplus associated with her
Monopoly operations.
B. Kenya's minimum wage is Kshs 850 per hour. Imagine you are a policy maker and you must
vote whether it be raised, lowered, or abolished. What will you decide? Why? Show how your
decision will look when graphed.
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