In long-run equilibrium-what price will monopolist charge

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Consider a perfectly competitive industry in which the inverse demand is given by p(y)=2001-2y and each firm has the following cost function : c (y)=(1/3)y^3+18 for y>0, c(y)=0 for y=0

(a) In the long-run equilibrium, what price will be charged for the product? What total quantity will be sold? How many firms will operate in this market?

(b) A tax of 6 dollars per unit sold is now imposed on each firm operating in this market. In the long-run equilibrium, what price will be charged for the product? What total quantity will be sold? How many firms will operate in this market?

(c) Suppose instead that a monopolist operates in this market. There is no tax imposed on the monopolist, and he can produce the product at a constant marginal cost of c. What price will the monopolist charge (as a function of c)? Can this price be below the price you found in part a?

Reference no: EM13998405

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