Question 1: What are the characteristics of monopolies and why is the output inefficient? Under
Question 2: which circumstances are they likely to occur?
Question 3: Suppose that the government is the only provider of water. The market demand function readsQ(P) = 50 - 2P. The government's total cost for producing water are described as follows:TC(Q) = 100 + 10Q.
(a) What price will the government charge if it wants to ensure an efficient allocation ofwater?
(b) What price will the government charge if it wants to maximize profits?
(c) Calculate the economic profit in both scenarios.
INSTRUCTIONS: (READ ALL INSTRUCTIONS)
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Program of study: (bachelor of science in economics, Human Resource Management)
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