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The industry demand curve for a particular market is: Q = 1800 - 200P. The industry exhibits constant long run average cost at all levels of output, regardless of the market structure. Long run average cost is a constant $1.50 per unit of output. Calculate market output, price (if applicable), consumer surplus, and producer surplus (profit) for each of the scenarios below.
a. Perfect Competition
b. Pure Monopoly
c. First Degree Price Discrimination
d. Compare the economic efficiency of each possibility (a, b, and c).
Where would a Cournot Duopoly rank in terms of efficiency?
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