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Suppose the domestic demand for honey is Qd = 1600 - 2P (where quantity is measured in tons) and the domestic supply is Qs = -500 + P and there are many buyers and sellers such that the market is perfectly competitive.
a. If honey producers form a cooperative and form a monopoly, find the monopoly equilibrium price and quantity. Compare the competitive equilibrium to the monopoly equilibrium in terms of price quantity and welfare. What is the social loss due to monopoly?
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