Answered: The inverse demand function in the…

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter8: Monopoly

Section: Chapter Questions

Problem 7SQP

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The inverse demand function in the industry is p(y)=10-2y. The marginal costs are constant and equal 2, the fixed costs are zero.

a. If the industry is perfectly competitive, what are the equilibrium output and price?

b. If there is a single monopolist in the industry, what are the equilibrium output and price? What is the profit?

c. Suppose now that the monopolist can perfectly discriminate all customers and charge different prices. How many units will be sold and what will be the profit?

d. Find the deadweight loss due to monopolies in parts b. and c.?

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d. Find the deadweight loss due to monopolies in parts b. and c.?

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