Quantity Demanded |
Price |
Revenue |
Marginal Revenue |
1 |
$500 |
||
2 |
$400 |
||
3 |
$300 |
||
4 |
$240 |
||
5 |
$200 |
||
6 |
$150 |
||
7 |
$100 |
||
8 |
$60 |
||
9 |
$28 |
||
10 |
$2 |
Quantity Supplied |
Price |
1 |
$20 |
2 |
$20 |
3 |
$20 |
4 |
$20 |
5 |
$20 |
6 |
$20 |
7 |
$20 |
8 |
$20 |
9 |
$20 |
10 |
$20 |
Assume the market reaches the competitive market equilibrium, what will be the price and quantity produced and sold?
A.
Quantity Demanded | Price ($) | Revenue ($) | Marginal Revenue ($) |
1 | 500 | 500 | |
2 | 400 | 800 | 300 |
3 | 300 | 900 | 100 |
4 | 240 | 960 | 60 |
5 | 200 | 1000 | 40 |
6 | 150 | 900 | -100 |
7 | 100 | 700 | -200 |
8 | 60 | 480 | -220 |
9 | 28 | 252 | -228 |
10 | 2 | 20 | -232 |
B.
They will sell 5 units , because afterwards, MC will be more than the MR. So, 5 units will be the profit maximizing output.
Price = $200 per unit.
C.
The firm is making a positive profit, because Price is more than the MC and in the short run.
D.
The price = $20 as MR = MC
Total output = 10 units
as there is a constant marginal cost of $20.
E.
In monopoly, there was less output and high price, but in perfect competition, there was higher output and low price. Hence, welfare was more with the perfect competition. With monopoly, there was dead weight loss and market inefficiencies.
F.
It is the government regulation that will be applied in monopoly market. It will mitigate the harsh market conditions and welfare level will increase.
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