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Q. Suppose the inverse demand function for an industry is p = 9 - Q/20. The cost function for the industry is C = 10 + 10Q - 4Q2 + 2/3Q3.
a) If the industry is perfectly competitive, what will the equilibrium be? What will producer and consumer surplus be? Make sure the firm is maximizing profits.
b) If the industry is a monopoly, what will the equilibrium be? How do producer and consumer surplus change from the perfectly competitive case? Make sure the firm is maximizing profits.
c) What is the deadweight loss of this monopoly?
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