Assignment:
Suppose that the market demand curve is P = 50-Q and the cost function for each firm is C = 10q + f.
a) For f equals 1, 10, and 100, find:
i) The total surplus if there is a single supplier required to meet demand at a regulated price that equals average cost of the monopolist.
ii) The total surplus if the unregulated market structure is the Cournot free-entry equilibrium.
iii) The total surplus if there is an unregulated monopolist.
b) Suppose that the administrative cost of regulation in (i) amounts to 10% of the total surplus. Taking this into account, what is the desirability for regulation for each value of f ?
Your answer must be, typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.