Question

S E S ! AaBDCDK AaBbcc AaBbci AaBbcc A 1 Normal No Spac... Heading 1 Heading 2 T Paragraph Styles 1. The diagram to the right initially represents market demand and supply for a competitive industry The supply curve represents the horizontal sum of the individual firms' marginal cost curves. Ilgnore the MR curve for now.) The demand equation is Q-120 -0.5P. a. Complete the following table contrasting the situations under competition and monopoly: (1) (2) (3) Competition Monopoly Change 20 T Consumer surplus Producer surplus Combined (market) surplus b. In the diagram, use the pattern wir" to shade in the welfare (deadweight loss caused by the monopoly. Price and per B 0 40 C70 30 Quantity pause

Answer 1

Ans)

consumer surplus Eam no producer surplus Qe

consumer surplus profit deadweightloss -MC 100 110 &

In Perfect competition, a profit maximising firm produces the quantity where MR and MC curve intersect.

In monopoly, a profit maximising firm produces the quantity where MR and MC curve intersect and then uses demand curve to determine the price.

b. In the diagram, use the pattern ar to shade in the welfare (deadweight loss caused by the monopoly, Nice and per Perfect competition

b. In the diagram, use the pattern wr to shade in the welfare ideadweight loss caused by the monopoly, Price and per unit 2DWL Monopoly #02 40 50 60 70 80

A.D.A. EEEEE BOLERABER ABC ABbce Ad Normal No Spac... Heading Heading 2 Paragraph Styles 1. The diagram to the right initially represents market demand and supply for a competitive industry The supply curve represents the horizontal rum of the individual firma' marginal cost curves, lgnore the MR curve for now.) The demand equation is Q-120.0.SP. . Complete the following table contrasting the situations under competition and monopoly Consumer surplus Producer surplus Kombined (market) surplus Competition Monopoly Change @) () 2.500 100 100 12.50 2250 000 3750 3150 600