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The market demand for a monopoly is given by P = 90 - 2Q, where Q is the number of the product demanded at price
The market demand for a monopoly is given by
P = 90 - 2Q,
where Q is the number of the product demanded at price P. The total cost function is given by
TC = 90 + 20Q +0.5Q^2.
- If the firm is a single-price monopoly, what are the equilibrium quantity and price? What are the resultant consumer surplus, producer surplus and social welfare?
- If the government forced the firm to behave as if it were a perfect competitor, what are the equilibrium quantity and price? What are the resultant consumer surplus, producer surplus and social welfare?
- How much does social welfare increase when the firm moves from monopoly to competition?
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