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…
