1) Suppose a country has a Perfectly Competitive market for a good where Demand is given...

1) Suppose a country has a Perfectly Competitive market for a good where Demand is given as: P = 100 -.2Q and Supply is given as: P = 10 + 0.05Q.

A) In the absence of trade what the equilibrium values for P and Q.

B) Suppose the country can import the good at a price of 20. Determine the level of domestic consumption, the level of domestic production and the level of imports.

2. Now suppose this country's market was a Pure Monopoly where Demand is: P = 100 - 0.2Q and the firm's marginal cost is:

MC = 10 + .05Q.

A) In the absence of trade what the equilibrium values for P and Q.

B) Suppose the country can import the good at a price of 20. Determine the level of domestic consumption, the level of domestic production and the level of imports.

Expert Solution

Rahul Sunny answered 2 years ago

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