Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / imagine a university called Bavis that is the monopoly in the market for economics degrees...

imagine a university called Bavis that is the monopoly in the market for economics degrees,with cost-function C(Q) = 25Q2+ 360. Imagine the inverse demand function for economics degrees is

imagine a university called Bavis that is the monopoly in the market for economics degrees,with cost-function C(Q) = 25Q2+ 360. Imagine the inverse demand function for economics degrees is p(Q) = 400−25Q. The government has decided it would ensure that there is no deadweight loss in this market for economics degrees by setting a price cap on Bavis.

A. What would be the equilibrium price and equilibrium quantity if the government did not impose a price cap and Bavis was able to operate as an unregulated monopoly?

B. At what optimal price should the government cap economics degree sales?

C. What are the new post-price cap equilibrium price and equilibrium quantity?

D. What is Bavis’s new profit at the equilibrium?

E. Prove that this new profit level is a global maximum.F. Show the new equilibrium price and equilibrium quantity graphically. Include

the original and regulated inverse demand curves, firm’s marginal revenue curve,and firm’s marginal cost curve.

Apr 12 2021 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions