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suppose you have been tasked with regulating a single monopoly firm that sells 50-pound bags of concrete . the firm has fixed costs of $10 million per year and a variable cost of $1 per bag no matter how many bags are produced?

a. if this firm kept on increasing its output level, would ATC per bag ever increase? is this a decreasing-cost industry?

b. if you wished to regulate this monopoly by charging the socially optimal price, what price would you charge? at that price, what would be the size of the firm's profit or loss? would the firm want to exit the industry?

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9676802

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