Calculate price and quantity that arise under competition

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Reference no: EM13155066

Suppose that a monopolist's market demand is given by P = 100-2Q( one hundred minus 2Q) and that marginal cost is given by MC = Q=2.

a. Calculate the prot-maximizing monopoly price and quantity.

b. Calculate the price and quantity that arise under perfect competition with a market supply curve P = Q=2.

c. Compare consumer and producer surplus under monopoly versus marginal cost pricing. What is the deadweight loss due to monopoly?

d. Suppose market demand is instead given by P = 180 - 4Q(one hundred eighty minus 4Q). What is the deadweight loss due to monopoly now? Explain why this deadweight loss diers from that in part (c). Hint: think about elasticity of demand.

Reference no: EM13155066

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