2350pqset0004monopoly

2350pqset0004monopoly - York University AS/ECON2350 V...

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Unformatted text preview: York University - AS/ECON2350 - V. Bardis Practice Set 4 1. Suppose market demand for a product is Q = 100- 2 p where Q denotes quantity demand at price p . A producer can provide Q units of the good at cost C ( Q ) = 10 Q . (a) Find the equilibrium price and quantity if the market is a monopoly. (b) Discuss the the efficiency and distribution consequences of monopoly by comparing the monopoly allocation to the perfectly competitive outcome. (c) Suppose the price of one of the inputs used to produce this good rises. Will the change in the price paid by consumers be greater under monopoly or perfect competition? Use a well-defined diagram to justify your answer. 2. Consider a perfectly competitive industry that consists of n identical firms, each firm’s costs given by C ( q ) = q 2 + 1 if it produces q units. Aggregate demand in the market is Q = 1000- 10 p . (a) Find the long-run equilibrium in the market....
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