Perfectly Competitive Long-Run Equilibrium Price and Quantity Assignment | Homework For You

Suppose that costs fall, so that C(q) now equals 2q; demand doesn’t change.

a) What is the perfectly competitive long-run equilibrium price and quantity?

b) Suppose the market is served by a monopolist, what is the long-run equilibrium price and quantity?

c) Graph the demand, marginal cost, and marginal revenue curves. Indicate the equilibrium price and quantity pairs under perfect competition and monopoly.

d) What are consumer, producer, and total surplus under perfect competition?

e) What are consumer, producer, and total surplus under monopoly?

f) What is the size of the deadweight loss under monopoly?

g) Does a cost reduction have a greater benefit in terms of the increase in total surplus if the original market is perfectly competitive rather than served by a monopolist?

h) Is this a constant cost, increasing cost, or decreasing cost industry?

i) Are there economies of scale, diseconomies of scale, or constant economies of scale in this industry? [Hint: think about the relationship between your MC and ATC] Get Economics homework help today