Problem
Monopoly, standard case. (10 points) Suppose Kaiser Permanente holds a monopoly on health services in the Oakland area. Its total cost of providing health services is given by T C(Q) = 25Q + 2Q2 , where Q represents the number of health services provided. The local market demand for these services is given by QD = 500 - 2P.
(a) What quantity of services will Kaiser choose to produce?
(b) What is Kaiser Permanente's Lerner Index?
(c) Calculate the size of the deadweight loss associated with the monopoly.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.