Determine what price and quantity would be produced if the bakery has no market power or private
Question:
Determine what price and quantity would be produced if the bakery has no market power or private information.
What is Tim’s profit if he can sell a perfectly competitive number of goods?
What price and quantity will Tim choose if he can exert monopoly power?
What is the firm’s per-unit profit if Tim sells the monopoly number of goods?
What would be the loss in consumer surplus between the two prices?
How much producer surplus is gained when Tim acts as a monopolist?
What is the size of the resulting dead-weight loss?
Sketch the supply and demand curves, and identify on the graph the equilibrium prices and quantities, along with the surpluses and DWL.
If Anil can purchase doughnuts at their marginal cost, determine his optimal consumption bundle. (He will need those doughnuts when he meets Boris later).
Microeconomics
ISBN: 978-0321866349
14th canadian Edition
Authors: Christopher T.S. Ragan, Richard G Lipsey