Question: Consider the industry described in question. Suppose that the monopolist who takes it over is a revenue maximize instead of a profit maximize. Recomputed your answers to parts (b) and (c) of question.
Q 1. With p measured as £ per thousand units and X measured as thousands of units per week, the market demand for X is given by
p = 20 - X
A group of small firms are able to provide X along a supply curve given by
p = 2 + 2X
(a) Find:
(i) the price of X; and
(ii) the quantity of X.
(b) A large firm appears on the market which can produce X at a constant long-run marginal and average cost of £8 per thousand units. Find:
(i) the demand curve facing that firm;
(ii) the price and output of the firm;
(iii) the firm's profit;
(iv) the overall output of X; and
(v) the quantity of X produced by the small competitive firms.