Suppose market demand for a good is MB = 100-2Q and the marginal cost of supplying...

Suppose market demand for a good is MB = 100-2Q and the marginal cost of supplying the good is MC = 40 + 8Q.

a) i) What is the MB of the 5^th unit? ii) What is the TB from 5 units? iii) What is the MC of the 5^th unit? iv) What is the TC of 5 units? v) What is the NB of 10 units? vi) Which unit has MB of $40? Of $60? (vii) Which unit has MC Of $40? Of $60? viii) How much benefits would a 6^th unit add to total benefits? (ix) How much cost would a 6^th unit add to total cost?

b) Calculate the following assuming the market acts competitively: market Q, market P, consumer surplus, producer surplus, net benefits.

c) Repeat part b assuming the market is a monopoly.

Expert Solution

Rahul Sunny answered 7 hours ago

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