Calculate demand elasticity at purchase price

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Reference no: EM132208366

Question: The inverse demand curve of a good is given by the relation P (Q) = 100-Q, where Q is the quantity of the good. Assume initially that production costs are zero.

1. Calculate demand elasticity at purchase price 40 and purchase price 60. Comment on your findings.

2. Find the marginal revenue curve and reflect it along with the demand curve on the same chart.

3. What quantity will be produced in a perfectly competitive market and which one monopoly. What are the respective prices in these two markets? Show them equilibrium in these two markets in the sub-scheme 2.

4. Explain why the monopoly is inefficient and calculate the loss prosperity it creates. Show the loss of prosperity in its chart Submission 2.

5. Suppose now that the production cost is given by the relation C (q) = q^2 + q. Find the marginal and average cost curves and list them in one chart. What is the supply curve of a small competitor business. Explain why.

6. Show diagrammatically, without making any calculation, what would be the curve small business if there was a fixed cost of 10. Explain your answer.

7. Show in the previous chart what would be the price of a perfect competitor market in the long run.

Reference no: EM132208366

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