question archive There is a monopolist, Concrete Mex, in the concrete market in Mexico
There is a monopolist, Concrete Mex, in the concrete market in Mexico
Subject:EconomicsPrice: Bought3
There is a monopolist, Concrete Mex, in the concrete market in Mexico. The demand function is Qo- 100 - 50p. The marginal cost of production is c=0.4. 1.1. Compute the profit maximizing price and production level for Concrete Mex. (4 points) 1.2. Calculate the consumer surplus, producer surplus, deadweight loss, and illustrate them in a graph. (6 points) 1.3. Concrete Mex claimed the high price is due to high transportation costs and persuaded the government to help cut down the costs. As a result, for every unit of concrete sold, the government subsidizes Concrete Mex 0.2 dollars. What are the new profit maximizing price and production level for Concrete Mex? (6 points) 1.4. Under the subsidy policy and the new price in Question 1.3, calculate the consumer surplus, producer surplus, and deadweight loss. You do not need to consider government spending for the deadweight loss. (6 points)
