Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / A monopoly's demand function is Q = 80 - P/6
A monopoly's demand function is Q = 80 - P/6. The interval marginal cost is 7Q and the external marginal cost is 3Q. What is the socially efficient output for the firm,
a) 30
b) None of these answers listed is correct
c) 24
d) 12
e) 40
Computation of the social efficient output for the firm:-
Social MC included Internal MC and External MC.
Social marginal cost = 7Q + 3Q = 10Q
At social optimal point. Price = marginal cost
Q = 80 - P/6
P = 10Q
Q = 80 - (10Q/6)
Q = ((80*6) - 10Q) / 6
6 * Q = 480 - 10Q
6Q + 10Q = 480
16Q = 480
Q = 480 / 16
= 30
Hence, the correct option is a) 30
