Question

.The new doctor in Ramea, a recent MUN graduate, faces ademand curve for her services and along-run average cost curveillustrated below.The doctor is a monopolist in the town but prevented by law fromattempting price discrimination. a.Will she be willing to practice in the town? Why or why not?b.What is theprice and quantity of services that maximize the consumers’plus producer’s surplus? c.Using the information provided in the graph, would the town as a wholebe better of with the presence of the doctor? Why or why not? Algebraically determine the netsurplus from the doctor’s services. How might the town convince the doctor to stay so that everyone is better off?

Answer 1

A) The specialist won't practice in the town since Profit is amplified when minor revenue=marginal cost and request bend is al the path lower to cost bend which implies monopolist can never accomplish benefit in the above chart. In this manner, the specialist won't practice when he can't get a Profit.

B) Social surplus is amplified when Price=Marginal cost.

Consequently, Quantity=40 and Price=25 is the social amplifying yield.

C) Town individuals can repay a portion of its shopper surplus to the specialist as expenses where neither specialist misfortunes nor town individuals misfortunes. Subsequently, all will be in an ideal situation by participating.