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Suppose there is currently a single firm in the United States that will accept a particular type of radioactive waste for disposal. The inverse demand function is given by

\(P=600-\frac{1}{2000}Q\) ,

where Q represents cubic feet of waste disposed per year. Suppose the cost of waste disposal is

\(C(Q)=50+250Q+\frac{3}{2000}Q^2\) .

What is the firm's optimal quantity and price?

Next, suppose that the disposal firm's state passes a law that limits waste disposal to 50,000 cubic feet per year, as a response to the monopolist's deadweight loss. Please calculate the change in the monopolist's deadweight loss and therefore determine whether limiting waste disposal in this manner provides a solution to the deadweight loss problem.

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M9491217

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