Answered: consumer surplus, producer surplus, and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

There is a monopolist,ConcreteMex,in the concretemarketin Mexico. The demand function is QD= 100–50p. The marginal cost of production isc=0.4.

(referencing) Question 1.3 ConcreteMex claimed the high price is due to high transportation costs and persuaded the government to help cut down the costs. As a result, for every unit of concrete sold, the government subsidizes ConcreteMex 0.2dollars. What are the new profit-maximizing price and production levels for ConcreteMex?

Under the subsidy policy and the new price in Question 1.3, calculate the consumer surplus, producer surplus, and deadweight loss. You do not need to consider government spending for the deadweight loss.

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