5) Let the demand of an industry be described by Q(P)=48-P. (a) Calculate the market output and price under monopoly assuming that the monopolist's cost function is C(O)=0/5+60+180. Find social welfare. (b) Consider a perfectly competitive industry with n firms in which each firm's cost function is C(q)=2q+6q+18. Find the aggregate supply curve and compare to the monopolist's marginal cost in (a). (c) Calculate the market output and price in the long run under perfect competition assuming that each firm's cost function is in (b). Find social welfare and compare to the monopoly in (a). (d) Determine the Lerner index corresponding to the industries in (a) and (c).

5) Let the demand of an industry be described by Q(P)=48-P. (a) Calculate the market output and price under monopoly assuming that the monopolist's cost function is C(O)=0/5+60+180. Find social welfare. (b) Consider a perfectly competitive industry with n firms in which each firm's cost function is C(q)=2q+6q+18. Find the aggregate supply curve and compare to the monopolist's marginal cost in (a). (c) Calculate the market output and price in the long run under perfect competition assuming that each firm's cost function is in (b). Find social welfare and compare to the monopoly in (a). (d) Determine the Lerner index corresponding to the industries in (a) and (c).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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