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Assume a market with demand Q = 16p^(--2) that is supplied by a monopoly with costs C(Q) = 6 + Q2/8.
1. Calculate the equilibrium price, output and monopoly profits.
2. What would be the equilibrium if the market was supplied competitively by firms, and each individual firm had the same costs?
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In the short run, the discrepancy between actual and expected price level causes changes in output and employment. But in the long run, if all other things remain constant, the hig
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