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In: Economics

3. Consider the following information on the production of basketballs. Demand: P = 10 – Q;...

3. Consider the following information on the production of basketballs. Demand: P = 10 – Q; Marginal Revenue = 10 – 2Q; Marginal Cost = 1 + Q. a. Graph Demand, Marginal Cost, and Marginal Revenue on the same chart. b. In a competitive market, what would the price and quantity be? c. Now assume this is a monopolistic market. What quantity will the monopolist produce? How much will it charge? Is the monopolist producing too much or too little relative to the competitive market? d. Again, assume this is a monopolistic market. Calculate the deadweight loss to society (Hint: the area of a triangle is 0.5*B*H, where B = the base of the triangle and H = the height of the triangle).

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Rahul Sunny answered 3 years ago
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