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QUESTION

The market demand curve for a product is given below: QD = 250 - 0.5 P (i) Assume that the market is supplied by a monopolist with a constant unit...

The market demand curve for a product is given below:

QD = 250 – 0.5P

(i)

Assume that the market is supplied by a monopolist with a constant unit cost equal to $100. Calculate the equilibrium price and quantity.

(ii)

Now assume that the market is supplied by perfectly competitive firms and that the market supply curve is perfectly elastic at a price equal to $100. Calculate the equilibrium price and quantity.

I. Demand curve=250-0.5P 0.5p=250-qp=500-2qSupply curve P=100qAt equilibrium demand =supply100q=500-2q102q=500q=4.9p=490.2 2. Demand curve=250-0.5P0.5p=250-qp=500-2qSupply curve P=100qAt...
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