Use the following to answer the questions. Demand: Qd = 12 − 2P Production comes from...

Use the following to answer the questions. Demand: Qd = 12 − 2P Production comes from two factories. You are allowed to solve this problem using either a monopolist model or a competitive market model—please note which one you used and clearly mark it! I would recommend using the Monopoly Model—it is easier. The supply from Factory A Produces a cost function of: CA = 4Q.

The supply from Factory B Produces a cost function of: CB = Q2

a. What is the total Output if you produced at both factories in this market for a given price P? (5 Points)

b. What is the perfect competitive equilibrium price and quantity? (5 Points)

c. What is the consumer surplus, producer surplus by region and total surplus? Show the consumer and producer surpluses graphically. (4 Points)

d. What is the Profit if the Manufacturer only produced in the more efficient plant? (3 Points)

e. What is the Profit if the Manufacturer produced in both factories? (3 Points)

Solutions

Expert Solution

Rahul Sunny answered 2 years ago

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