Suppose there are 100 firms in a perfectly competitive industry. Each firm has a U- shaped, long-run average cost curve that reaches a minimum of $10 at an output level of 8 units. Marginal costs are given by...

1. Suppose there are 100 firms in a perfectly competitive industry. Each firm has a U- shaped, long-run average cost curve that reaches a minimum of $10 at an output level of 8 units. Marginal costs are given by MC (q) = q+2 and market demand is given by Q = 1000 - 20P a. Find the long-run equilibrium in this market and determine the consumer and producer surplus (in this case, the areas of the triangles). b. Suppose instead there was a single supplier whose marginal cost curve is 1 MC(Q) = 100 2+2 i) Find the monopolist's total revenue curve, TR(Q). ii) If the monopolist's marginal revenue curve is MR(Q) = 50 - what is its optimal supply? iii) Explain why this outcome is inefficient in comparison to the competitive outcome.1. Suppose there are 100 firms in a perfectly competitive industry. Each firm has a U- shaped, long-run average cost curve that reaches a minimum of $10 at an output level of 8 units. Marginal costs are given by MC (q) = q+2 and market demand is given by Q = 1000 - 20P a. Find the long-run equilibrium in this market and determine the consumer and producer surplus (in this case, the areas of the triangles). b. Suppose instead there was a single supplier whose marginal cost curve is 1 MC(Q) = 100 2+2 i) Find the monopolist's total revenue curve, TR(Q). ii) If the monopolist's marginal revenue curve is MR(Q) = 50 - what is its optimal supply? iii) Explain why this outcome is inefficient in comparison to the competitive outcome