Suppose that the market demand is: P = 24 – 3Q, where P is price and...

Suppose that the market demand is: P = 24 – 3Q, where P is price and Q is quantity demanded, and marginal revenue is: MR = 24 – 6Q.
The marginal cost is: MC = 6 and total fixed cost is 0.
a. If the market structure is monopoly, determine the profit maximizing price and output for this monopolist and calculate its economic profit or loss at the profit maximizing output.
b. If the market structure is perfect competition, determine the profit maximizing price and total output and calculate a typical firm’s profit or loss at the profit maximizing output.
c. Which market structure is more efficient, i.e., monopoly or perfect competition? Also explain your answer in (c) diagrammatically.

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Expert Solution

Rahul Sunny answered 1 year ago

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