A monopolist faces the inverse daily demand curve P = 20 – 0.005Q, and has the total cost curve C(Q) = 10Q. a. Find the profit-maximizing price and output, and the firm’s daily profit. b. Find the firm’s Lerner Index at the monopoly price and output. Why is this a measure of market power? What determines its value? c. If this industry was perfectly competitive instead of a monopoly, and that all the firms had a constant marginal cost MC(q) = 10. What would be the industry output and price at a perfectly competitive equilibrium?
A monopolist faces the inverse daily demand curve P = 20 – 0.005Q, and has the total cost curve C(Q) = 10Q. a. Find the profit-maximizing price and output, and the firm’s daily profit. b. Find the firm’s Lerner Index at the monopoly price and output. Why is this a measure of market power? What determines its value? c. If this industry was perfectly competitive instead of a monopoly, and that all the firms had a constant marginal cost MC(q) = 10. What would be the industry output and price at a perfectly competitive equilibrium?
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter9: Monopoly
Section: Chapter Questions
Problem 19SQ
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A monopolist faces the inverse daily demand curve P = 20 – 0.005Q, and has the total cost curve C(Q) = 10Q.
a. Find the profit-maximizing price and output, and the firm’s daily profit.
b. Find the firm’s Lerner Index at the
c. If this industry was
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