Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hi, please assist me in this question, thank you in advance for your assistance. Consider a monopolist with a demand equation P = 60 -

Hi, please assist me in this question, thank you in advance for your assistance.

Consider a monopolist with a demand equation P = 60 - 2Q, where P is the price in dollars and Q is the quantity. The monopolist is able to produce the output with a constant marginal cost of $20 which is equals to the average total cost. Assume that there is no fixed cost.

(a) If the monopolist practice single pricing, determine the price, quantity, profit, consumer surplus and producer surplus in this market with the aid of a suitable diagram. Appraise the efficiency in this market.

(b) If the monopolist were to practice perfect price discrimination, determine the quantity, profit, consumer surplus and producer surplus of the monopolist. Appraise the efficiency in this market.

(c) Consumers and the society are always worse off in a monopolised market compared to a perfectly competitive market. Do you agree? Examine the two (2) market structures and explain with the help of a suitable market diagram

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Leading And Collaborating In A Competitive World

Authors: Thomas S Bateman, Scott A Snell, Robert Konopaske

15th International Edition

978-1265051303

Students also viewed these Economics questions