5) Let the demand of an industry be described by Q(P)=48-P.(a) Calculate the market output and priçe under monopoly assuming that themonopolist's cost function is C(Q)=Q²15+6Q+180. Find social welfare.(b) Consider a perfectly competitive industry with n firms in which each firm's costfunction is C(q)=2q² +6q+18. Find the aggregate supply curve and compare to themonopolist's marginal cost in (a).(c) Calculate the market output and price in the long run under perfect competitionassuming that each firm's cost function is in (b). Find social welfare and compare to themonopoly in (a).(d) Determine the Lerner index corresponding to the industries in (a) and (c). 7) Assume that the dairy industry is initially in a perfectly competitive equilibrium. Assumethat, in the long run, the technology is such that average cost is constant at all levels ofoutput. Suppose that producers agree to form an association and behave as a profit-maximizing monopolist. Explain clearly in a diagram the effects on (a) market price, (b)equilibrium output, (c) economic profit, (d) consumer surplus, and (e) efficiency.

“Since you have asked multiple questions, we will solve the first question for you. If you want any…

Answered: 5) Let the demand of an industry be…

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 1.2P

See similar textbooks

Similar questions

How is the perceived demand curve for a monopolistically competitive film different from the perceived demand curve for a monopoly or a perfectly competitive film?
Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2 Marginal cost: MC = q where q is an individual firms quantity produced. The market demand curve for this product is Demand:QD = 120 P where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market. a. What is each firms fixed cost? What is its variable cost? Give the equation for average total cost. b. Graph average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is average-total-cost curve at its minimum? What is marginal cost and average total cost at that quantity? c Give the equation for each firms supply curve. d. Give the equation for the market supply curve for the short run in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market in the short run? f. In this equilibrium, how much does each firm produce? Calculate each firms profit or loss. Is there incentive for firms to enter or exit? g. In the long run with free entry and exit, what is the equilibrium price and quantity in this market? h. In this long-run equilibrium, how much does each firm produce? How many firms are in the market?
3. An industry is subject to agglomeration economies (and diseconomies). The profit per firm is £100 for an isolated firm, and increases to a maximum of £160 per firm in a cluster with 6 firms. The profit curve is linear, with a slope of +£12 in the positively-sloped part and -£10 in the negatively-sloped part. Illustrate this profit curve. What will be the equilibrium number of firms in the cluster and how much profit will each firm make? Will this be greater than the efficient number of firms? Explain why. How will an increase in transport costs affect the profit curve and the optimal cluster size? Briefly explain your answer.

Recommended textbooks for you

ECON MICRO

Economics

ISBN:

9781337000536

Author:

William A. McEachern

Publisher:

Cengage Learning

Essentials of Economics (MindTap Course List)

Economics

ISBN:

9781337091992

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Principles of Economics, 7th Edition (MindTap Cou…

Economics

ISBN:

9781285165875

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

ECON MICRO

Economics

ISBN:

9781337000536

Author:

William A. McEachern

Publisher:

Cengage Learning

Essentials of Economics (MindTap Course List)

Economics

ISBN:

9781337091992

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Principles of Economics, 7th Edition (MindTap Cou…

Economics

ISBN:

9781285165875

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Principles of Microeconomics (MindTap Course List)

Economics

ISBN:

9781305971493

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Principles of Microeconomics

Economics

ISBN:

9781305156050

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS

5) Let the demand of an industry be described by Q(P)= (a) Calculate the market output and priçe under monopoly assuming that the monopolist's cost function is C(Q)=Q²/5+6Q+180. Find social welfare.