Market demand for a product is given by P=700 – 10Q. Marginal cost is given by MC = 200.
a. Find the equilibrium price and quantity if the market is competitive.
b. Find the consumer and producer surplus.
c. Find the price and quantity under monopoly.
d. Find the consumer and producer surplus under the monopoly.
e. Demonstrate that monopoly is inefficient compared to perfect competition using what you have found in parts a through d.
f. Predict how price and quantity would be different from both the monopoly and perfect competition outcomes if there were two firms in this market.