Deadweight loss created by this monopoly, Macroeconomics

Assignment Help:

The market for quits is initially competitive and the market demand is: P=400-0.4QD. The
Combined marginal costs of the firms in the quit industry are: MC=50+0.6Q.

a. Draw the demand, and marginal cost curves. Calculate and show how much these firms will sell and what they will charge.

b. Now a bunch of other firms buy out all of the quit producers and create a cartel (their combined MC doesn't change). How much will the cartel produce? What price will they charge? (Draw any necessary new curves on your graph above).

c. Is there any DWL associated with the cartel? If so, how much?

d. Now suppose one big firm comes and buys out all of the firms in the cartel. This monopoly somehow miraculously is able to perfectly price discriminate. How much will this firm produce? What will be the deadweight loss created by this monopoly?


Related Discussions:- Deadweight loss created by this monopoly

Credit multiplier, what is credit multiplir and how does it work

what is credit multiplir and how does it work

The supply and demand for oil in the us, Over the last year both the supply...

Over the last year both the supply and demand for oil in the US has gone up. What might have caused this and what happened to the price and quantity of oil?

Determine the appropriate interval-hypotheses , 1. Practice identification...

1. Practice identification of proper analysis type (1-Sample Z, 1-Sample t, 2-Sample t, Paired t, etc). 2. Practice hypothesis testing. 3. Practice interpretation of sta

Payment toward its bank loan, During the year, Calabash Clinic made a $50,0...

During the year, Calabash Clinic made a $50,000 cash payment toward its bank loan which it had previously recorded; $40,000 was for principal, and $10,000 was to pay the full amoun

Enumerate the categories of firms in the circular flow, Firms in the circul...

Firms in the circular flow We divide all firms into 3 categories: F R comprises all firms which acquire raw material (farm products, iron ore and so on), F H all those that p

Equilibrium income, Equilibrium Income  The next step is to use the agg...

Equilibrium Income  The next step is to use the aggregate demand function, AD, to determine the equilibrium level of income and output. This is done in figure . Recall that the

Explaining balance of payments, Explaining balance of payments: First,...

Explaining balance of payments: First, with the second oil shock of  1979-80 and  doubling of  India's  import bill along with  dismal  export performance as result of severe

How are the qualitative aspects of development measured, How are the qualit...

How are the qualitative aspects of development measured? Development includes the evolution of more safe, stable, participatory and only societies. This involves capacity deve

What is price elasticity of demand, Explain the elasticity concept as it ap...

Explain the elasticity concept as it applies to necessities and luxuries. Calculate the price elasticity of demand when P= 160 - Q= 480: and when P=240 - Q=320. Calculate and inter

Classical model, why and how is price level determined by the monetary sect...

why and how is price level determined by the monetary sector in the classical model?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd