Suppose the long-run marginal cost for a firm is given by MC= x^2 - 2x+5 , where x is the quantity supplied by the firm. Demand for the industry’s product is given by Q= 200-2p, where Q is quantity demanded and p is price. Consider two possibilities: (1) The industry is perfectly competitive ,or (2) the industry is an unnatural monopoly that operates at a single price. (a) What will the amounts of firm and industry output (x, Q) be under each form of industrial organization? (b) How much would a firm be willing to pay to obtain the right to act as a monopoly in this industry? Please show your work. (c) What is the dollar amount of deadweight loss from the monopoly? Please show work for each part.
Suppose the long-run marginal cost for a firm is given by
MC= x^2 - 2x+5 , where x is the quantity supplied by the firm. Demand for the industry’s product is given by Q= 200-2p, where Q is quantity demanded and p is price. Consider two possibilities: (1) The industry is
(a) What will the amounts of firm and industry output (x, Q) be under each form of industrial organization?
(b) How much would a firm be willing to pay to obtain the right to act as a monopoly in this industry? Please show your work.
(c) What is the dollar amount of
Please show work for each part.
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