Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

thanks here is the question please help!!! Question 2 (15 marks) Consider a monopolistically competitive market for good X produced by rm A facing a

thanks here is the question please help!!!

image text in transcribed
Question 2 (15 marks) Consider a monopolistically competitive market for good X produced by rm A facing a demand function P = 1000 3Q. Firm A's marginal cost and average total cost at a production level Q are respectively 4-0000 MC = 40 and arc = +40. a) What is the short-run economic prot or decit for rm A? (4 marks) b) Your student cements that in the long run rm A will earn zero economics prot, and therefore there is no deadweight loss in this market. Do you agree? Explain briey in terms of the concept of Pareto efficiency. (4 marks) Now, the market for good X is changed into an oligopoly market. And good X is produced by rm A and B, which face a demand function P = 1000 5Q. Firm A's marginal cost and average total cost at a production level Q are respectively MC =40 and ATC =%+4Q. Firm B's marginal cost and average total cost at a production level Q are respectively MC =60 and ATC =%+6Q. c) What is the market supply curve for good X? (1 mark) d) What is the market price and market output for good X if rm A and B cooperates as a cartel? (2 marks) e) What is the output and prot of rm A and B respectively, if they cooperate as a cartel? (4 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Principles of economics

Authors: N. Gregory Mankiw

6th Edition

978-0538453059, 9781435462120, 538453052, 1435462122, 978-0538453042

More Books

Students also viewed these Economics questions