(a) What is the profit-maximizing choice of output? (b) If the government could set a price ceiling on this monopolist in rder to force it to act as a competitor, what price should they set? (c) What output would the monopolist produce if forced to behave as a or?

Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter9: Monopoly
Section: Chapter Questions
Problem 7SQ
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14.22. A monopolist has a cost function of c(y) = y so that its marginal
costs are constant at $1 per unit. It faces the following demand curve:
0,
D(p) = { 100/p if p < 20.
if p > 20;
(a) What is the profit-maximizing choice of output?
(b) If the government could set a price ceiling on this monopolist in
order to force it to act as a competitor, what price should they set?
(c) What output would the monopolist produce if forced to behave as a
competitor?
Transcribed Image Text:14.22. A monopolist has a cost function of c(y) = y so that its marginal costs are constant at $1 per unit. It faces the following demand curve: 0, D(p) = { 100/p if p < 20. if p > 20; (a) What is the profit-maximizing choice of output? (b) If the government could set a price ceiling on this monopolist in order to force it to act as a competitor, what price should they set? (c) What output would the monopolist produce if forced to behave as a competitor?
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