Question 2

(11 marks)

Suppose a Demand curve given by P = 120 - 15Q.The Total cost C is given by

TC = 6Q²

(a)Calculate the profit maximizing equilibrium price and quantity assuming this firm operates as a monopoly.

(3 marks)

(b)If this firm is in a monopolistically competitive market instead, what would be its equilibrium output and price in the long-run?

(4 marks)

(c)Visithttps://www.afr.com/news/economy/trade/acccs-rod-sims-says-1-stamps-not-a-done-deal-20150907-gjgysiand read the following article 'ACCC's Rod Sims says $1 stamps not a 'done deal'. Then answer the questions that follow.

Based on the above article, what kind of barriers to entry have allowed Australia Post to continue as a monopoly in providing postal services for standard mail in Australia? Explain your answer.

(4 marks)