Please explain/show all steps, I don\'t know how to work this. The accompanying
ID: 1187800 • Letter: P
Question
Please explain/show all steps, I don't know how to work this.
The accompanying diagram depicts a monopolist whose price is regulated at $10 per unit. Use the figure to answer the questions that follow.
a. What price will an unregulated monopoly charge?
b. What quantity will an unregulated monopoly produce?
c. How many units will a monopoly produce when the regulated price is $10 per unit
d. Determine the quantity demanded and the amoutn produced at the regulated $10 per unit. Is there a shortage or surplus?
e. Determine the deadweight loss to society when the regulated price is $10 per unit
f. Determine the regulated price that maximizes social welfare. Is ther a shortage or surplus at this price?
Explanation / Answer
a) 16
b) 4 (WHERE MC =MR PROFIT MAXIMISATION QUANTITY)
c) 2( WHERE MC=AR i>e> PRICE)
4) QUANTITY DEMANDED IS 10 UNITS AND QUANTITY SUPPLIED 2, SHORTAGE.
5) 6 DEAD WEIGHT LOSS
6) MAXIMUM SOCIAL WELFARE WILL BE ACHIVED REGULATED PRICE IS EQUAL TO THE EQUILIBRIUM PRICE. THERE WILL BE NEITHER SHORTAGR NOR SURPLUS.