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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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a) Summarize the basic tenets of the arguments in this case. b) Do you agree with main tenets of the arguments in the case? Why? Justify your answer with detailed explanations. s
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