Answer to Question #146539 in Microeconomics for Edwin

Question

A firm has a monopoly in the market for match boxes. In order to produce Q match boxes, it cost a firm C(Q)=2Q^2
A) Find the marginal cost of producing a matchbox for this firm?
b) The demand for match boxes in Q=12-0.25P ,Find the level of output that maximizes the firms profit. What price is the firm charging?
C) What level of output and price would maximize total surplus in the match box market? Hint: Find tje competitive market output level and price?
D)What is the dead weight loss from monopoly power of the firm?
E) Find a price regulation the government could impose that would induce the firm to maximize total surplus, i.e produce the efficient quantity from part (C)
F) If the government gave the firm subsidy, S, for every match box produced, what output level would the firm choose? Find the choice of subsidy that maximizes total surplus, i.e, induces the firm to produce the efficient quantity from part (C) above?

Answer 1

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