Initially in a perfectly competitive equilibrium

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Assume that the dairy industry is initially in a perfectly competitive equilibrium. Assume that, in the long run, the technology is such that average cost is constant at all levels of output. Suppose that producers agree to form an association and behave as a profit-maximizing monopolist. Explain clearly in a diagram the effects on (a) market price, (b) equilibrium output, (c) economic profit, (d) consumer surplus, and (e) welfare loss.

Reference no: EM13733609

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