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Price cap monopoly question Imagine a university called Bavis that is the monopoly in the market for economics degrees, with cost-function C(Q) = 25Q2 + 450

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Price cap monopoly question Imagine a university called Bavis that is the monopoly in the market for economics degrees, with cost-function C(Q) = 25Q2 + 450. Imagine the inverse demand function for economics degrees is pIQ) – 300 - 250. The government has decided it would ensure that there is no deadweight loss in this market for economics degrees by setting a price cap on Bavis. A. What would be the equilibrium price and equilibrium quantity if the govern- ment did not impose a price cap and Bavis was able to operate as an un-regulated monopoly? Ma- Mc=500 P(W=300-25Q Me=MC TR - P&Q MR=300-500 MR=d TR da TR= 200-250 sou -501 = SUR (Q=3 p= 225 da case**450) 5 B. At what optimal price should the government cap economics degree sales? MC:D 50 Q=300-250 750 =300 p=300-25(4) [Q=4 P=100 ????? ???? C. What are the new post-price cap equilibrium price and equilibrium quantity? 300 Q-256² = 250* +450 Q- -b? J 22-4an Σ Q = -4.5.45) 13 50Q *-300Q+450=0 Q = 40 t uz P = 150 Q: Av. Z o TQ=6 D. What is Bavis's new profit at the equilibrium? p=320-26 (6) E. Prove that this new profit level is a global maximum. F. Show the new equilibrium price and equilibrium quantity graphically. Include 6 the original and regulated inverse demand curves, firm's marginal revenue curve, and firm's marginal cost curve. G. What are consumer surplus, producer surplus, and deadweight loss at the equilibrium? How do they compare to the case of the un-regulated monopoly?