Consider a town that has many firms that provide landscaping services. All firms provide

the exact same service with no differences in quality, speed, or any other characteristic, and there are

no barriers to entry. The market demand is given by P = 150 - Q where P is the price of the

landscaping services per unit of land and Q is the units of land. The marginal cost of landscaping

services is $10 per land unit.

a. What market structure is implied by the description above? State the profit-maximizing condition

and calculate the equilibrium price and quantity, firm profit, and consumer surplus for this market.

Show all work.

b. Suppose that the city council of this town passes an ordinance that residents must use the services of

just one landscaping firm. What is the new market structure? State the profit-maximizing condition

for this firm and calculate the equilibrium price and quantity, firm profit, and consumer surplus for

the new market. Show all work.

c. In a few sentences, compare the profits and consumer surpluses between the markets described in

parts a and b. Identify the key economic characteristic by which the markets differ, and how that

characteristic influences the profit and consumer surplus outcomes in the two markets.