Consumer surplus-producer surplus-deadweight loss

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Reference no: EM1367183

The market demand curve for a product is given as:

Q = 250 - 0.5P

a) Firm X1- Assume that the market is supplied by a monopolist with a constant unit cost equal to $100. Calculate the equilibrium price and quantity

b) Firm X2- Now assume that the market is supplied by perfectly competitive firms and that the market supply curve is perfectly elastic at a price equal to $100.

Compute the equilibrium price and quantity. Describe why the output and price levels are different for X1 and X2. Explain what occurs to consumer surplus, producer surplus, and deadweight loss.

Reference no: EM1367183

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