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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
e. welfare loss
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Find the equilibrium market quantity and price if the market demand is Qd = 320 - 30p. Part four - how much output will each firm produce?
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As a result, price of Domino's pizzas fell from $8 a pie to $2 a pie following week. Quantity of pizzas demanded soared following week from 1 pie an hour to 100 pies an hour. What was price elasticity of demand for Domino's pizza.
Explain how does the U.S. Government correct for this apparent market failure.
Provide a rational for why you feel the new target market and pricing strategy would be successful and the likely impact to the profitability of the firm.
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