ECO100 Assign6 - James E. Pesando Economics 100 Assignment...

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James E. Pesando Economics 100 Assignment #6 Monopoly and Perfect Competition 1. A firm owns a lake, which has especially clear and attractive water. The firm sells this water to the public. There are no fixed costs. The marginal cost of producing each bottle of water is $2. The demand curve for this bottled water is downward sloping. (a) On a diagram, show: (i) the price and level of output that will prevail in this industry (a monopoly); and (2) the price and level of output that would prevail if a large number of competitive firms each owned a portion of the lake. (b) Show, on your diagram, the consumer surplus if a single firm owns the lake. Would consumer surplus be larger if many firms each own a portion of the lake? Explain your answer. (c) What is the allocatively efficient price for a bottle of water from this lake? Explain your answer. 2. Your company has a monopoly on bottled water sales in Toronto. If the City of Toronto increases the price of tap water, what is the change in your firm’s
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This note was uploaded on 12/22/2009 for the course BIGBOOK_01 Bigbook_01 taught by Professor Bigbook_01 during the Spring '09 term at University of Toronto- Toronto.

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ECO100 Assign6 - James E. Pesando Economics 100 Assignment...

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