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Posted: April 10th, 2022

Monopolist selling widgets – Microeconomics

You’re a monopolist selling widgets. You face prices of C(Q) = 10 + 2Q^2

Suppose you face the next market demand: Q(p) = 3000 – 2p.

(a) What value will you cost? What number of widgets will you promote?

(b) Suppose coverage group claims that personal prices don’t equal social prices. They are saying that social marginal price = 3Q. Should you use SMC as a substitute of PMC, what value will you cost? What number of widgets will you promote?

(c) On this scenario (the one in (b)), are you producing a adverse externality? Talk about (in two sentences or much less) how the federal government may get you to make choices based mostly off of SMC (on this explicit scenario)?

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