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Suppose that Intel has a monopoly in the market for computer chips

Economics

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Suppose that Intel has a monopoly in the market for computer chips. In order to produce X computer chips, it costs Intel C(x) = 2x?. (a) Find the marginal cost of producing a computer chip for Intel. [2 marks] (b) The demand for computer chips is X=12 – 0.25 P. Find the level of output that maximizes Intel's profits. What price is Intel charging? [6 marks] (c) What level of output would maximize total surplus in the computer chip market?[4 marks] (d) Suppose the government knew the demand and production functions. Find a price regulation the government could impose that would induce Intel to maximize total surplus, i.e., produce the efficient quantity from part (e). [4 marks] (e) If the government subsidized Intel s for every unit of computer chips produced, what quantity would Intel choose as a function of s? Find the choice of subsidy that maximizes total surplus, i.e., induces Intel to produce the efficient quantity from part (e). [6 marks) (f) Both the price regulation policy from part (d) and the subsidy policy from part (e) maximize total surplus. Is there any reason someone might prefer one policy over the other? [3 marks]