6. Suppose the aggregate demand and the aggregate supply in a competitive market are given respectively by Demand: Supply: 1 9=- P + 30 8 1 q= P-15 4 where q denotes quantity and p denotes the price of the good. a) Find the market equlibrium. b) Find the marginal cost function and the total cost function of the industry. c) Suppose next that the industry is a monopoly with the cost function you derived in part (b). Find the monopoly equilibrium and calculate the efficiency loss. d) We know that inside a cost function "hide" the firm's production technology and input prices Suppose that due to an increase in the price on an input used in the production of this good, the marginal cost rises by 2 dollars at every level of output. Determine the portion of this cost increase that will be passed to consumers under (i) perfect competition and (ii) monopoly.

6. Suppose the aggregate demand and the aggregate supply in a competitive market are given respectively by Demand: Supply: 1 9=- P + 30 8 1 q= P-15 4 where q denotes quantity and p denotes the price of the good. a) Find the market equlibrium. b) Find the marginal cost function and the total cost function of the industry. c) Suppose next that the industry is a monopoly with the cost function you derived in part (b). Find the monopoly equilibrium and calculate the efficiency loss. d) We know that inside a cost function "hide" the firm's production technology and input prices Suppose that due to an increase in the price on an input used in the production of this good, the marginal cost rises by 2 dollars at every level of output. Determine the portion of this cost increase that will be passed to consumers under (i) perfect competition and (ii) monopoly.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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