7.(25%) The market is in monopoly. The firm's fixed cost is zero and marginal cost is c. The market price demand function is given by: p = a - q. Assume a ＞ c. Let CS be consumers' surplus and π the profit.
申論題內容
(D)Let the regulator's objective function be O(p) = a ㆍCS + (1 - a)π, where a ＜ 0.5. What is the optimal price setting for the regulator? (5%)
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