INDUSTRIAL ORGANIZATION AND ANTITRUST POLICY Econ class

Reference - Modern Industrial Organization by Dennis W. Carlton and Jeffrey M. Perloff, 4th edition, 2015.

Question 3 (a) Consider a market characterized by the inverse demand curve P = 10 Q. Suppose there is only one seller which has costs C(Q) = Q2 + 2Q 1. Find the price associated with a natural monopoly. (b) Suppose the market was initially a monopoly. How much do consumers gain from a switch to natural monopoly