Question

Assignment 3 Due April 4 11:59 pm online 1. The demand schedule for a certain cellphone plan is given below. (Q is the quantity/number of customers who get the plan.) Assume that the marginal cost to offer the plan to an additional customer is $5. A) What is the efficient quantity/number of customer? B) Calculate the marginal revenue for each quantity/price combination listed in the table. C) What is the monopoly quantity? D) If there are two providers in the market that provide the same plan and they compete on quantity, the total quantity will be ___ (greater than/less than/equal to) the quantity found in C), because $0 140 130 15 20 120 110 100 90 80 25 30 | | 35 70 40 45 60 50 2. Compare P (price) and MC (marginal cost) in equilibrium under each of the following market structures. Then explain your answer with one sentence or a graph. a) P___MC under perfect competition (>, < or =) b) P___MC under monopoly c) P_ MC under monopolistic competition

Answer 1

I o ITR IMR 25 130 650 [1200 11650 1450 12000 1350 2250 250 2400 liso 1245050 2400/-50 225d-150 190 70 60 45 1 Effeient Quantity would be where a) MR = Me or Price c) Monopoly quantity is that where monopolist will get maximum profit equal to d) If there are 2 providers the total quantity will be tess then the monopoly quantity because it will be divided in 2 forms 9.2 P=MC in all types of competition de perfect competition, monopoly or monopolistic competition. It is because it is the Profit maximising condition for all Me 1 me 11 me MR MR at LO NR perfect competidton Monopoly