Suppose demand is Q = 10000 - 1000P 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 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 deadweight loss.
Suppose demand is Q = 10000 - 1000P 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 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 deadweight loss.
Chapter9: Monopolistic Competition And Oligoply
Section: Chapter Questions
Problem 11SQP
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Suppose demand is
Q = 10000 - 1000P
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
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 deadweight loss.
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