Compute the resulting change in consumer surplus

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Reference no: EM131118581

Under patent protection, a firm has a monopoly in its production. Market demand is estimated to be P = 100 – .2Q. The firm’s economic costs are given by ATC = MC = $60 per unit.

a. Determine the firm’s optimal output, price and economic profit.

b. After the firm’s patent expires, predict the new market output and price under perfect competition. Assume that competing suppliers have the same economic costs as the original producer. What is the new total industry profit?

c. Compute the resulting change in consumer surplus.

Reference no: EM131118581

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