Sunday, November 13, 2016

2008 Micro FRQ #3

2008 Micro FRQ #3

(A) For a competitive market for which there is a binding (effective) price ceiling , draw a CLG and label the price ceiling Pc & the quantity sold, Qa, and the socially efficient output Qb.

(B) (i) Using the labelling in the graph, identify the profit-maximising output and the socially efficient output. (Output means Quantity)

(B) (ii) At the socially efficient output is the monopoly making a profit or incurring a loss. Identify the area of profit or loss.

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