Graph the demand, marginal cost, and marginal revenue curves.
Refer to Figure 12.1. Suppose demand is
Q = 10,000 -1,000P
and marginal cost is constant at MC = 6. From the given demand curve, one can compute the following
a. Graph the demand, marginal cost, and marginal revenue curves.
b. Calculate the price and quantity associated with point C, the perfectly competitive outcome. Compute industry profit, consumer surplus, and social welfare.
c. Calculate the price and quantity associated with point M, the monopoly/perfect cartel outcome. Compute industry profit, consumer surplus, social welfare, and deadweight loss.
d. Calculate the price and quantity associated with point A, a hypothetical imperfectly competitive outcome, assuming that it lies at a price halfway between C and M. Compute industry profit, consumer surplus, social welfare, and deadweight loss
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Answers
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Posted 22 Jun 2017 11:06 AM
My Price 7.00
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