Consider a market with a demand curve P = 500 - 5Q which is being supplied...

 

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Consider a market with a demand curve P = 500 - 5Q which is being supplied by a monopolist. The cost of production of the monopolist is given by C(Q) = 5. P and Q are the price and quantity of the entire market. (a) Find the expression of total and marginal revenue, and marginal cost. Draw the demand, MR and MC curves in a clearly labelled diagram. (b) Find out how much output will be sold by the monopolist in equilibrium? What price she will charge? How much profit will be earned by her. (c) What would be the equilibrium price and quantity if the market were served by a perfectly competitive firms instead? (d) Find the consumer and producer surplus in competitive and monopoly markets? Find and explain the dead-weight loss due to monopoly operation. Consider a market with a demand curve P = 500 - 5Q which is being supplied by a monopolist. The cost of production of the monopolist is given by C(Q) = 5. P and Q are the price and quantity of the entire market. (a) Find the expression of total and marginal revenue, and marginal cost. Draw the demand, MR and MC curves in a clearly labelled diagram. (b) Find out how much output will be sold by the monopolist in equilibrium? What price she will charge? How much profit will be earned by her. (c) What would be the equilibrium price and quantity if the market were served by a perfectly competitive firms instead? (d) Find the consumer and producer surplus in competitive and monopoly markets? Find and explain the dead-weight loss due to monopoly operation.

Answer rating: 100% (QA)

ANSWER P5005Q Total revenue TR PQ 5005QQ TR 500 Q5Q d d TR Marginal revenueMRdQ d... View the full answer