Refer to Figure. Suppose demand is
Q = 10,000 €“ 1,000P

and marginal cost is constant at MC = 6. From the given demand curve, one can compute the following marginal revenue curve:
MR = 10 €“ Q/500
a. Graph the demand, marginal cost, and marginal revenue curves.
b. Calculate the price and quantity associated with point C, the perfectly competitive outcome. Compute industry profit, consumer surplus, and social welfare.
c. Calculate the price and quantity associated with point M, the monopoly/perfect cartel outcome. Compute industry profit, consumer surplus, social welfare, and deadweight loss.
d. Calculate the price and quantity associated with point A, a hypothetical imperfectly competitive outcome, assuming that it lies at a price halfway between C and M. Compute industry profit, consumer surplus, social welfare, and deadweightloss.

Transcribed Image Text:

Price PM PA Pc MC MR 0c M QA Quantity per week