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1. The industry demand curve for flying broomsticks is:
Q = 1800 - 200P.
The flying broomstick 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. Compare the economic efficiency of each possibility.
a) Perfect Competition
b) Pure Monopoly (Hint: MR = 9 - 0.01Q)
c) First Degree Price Discrimination
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