Market structures and monopolies
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Given the following graphs and information answer the following questions (a) - (c)
(1) Q*=100,000 (2) Pmarket = $25 (3) q* = 2500 (4) ATC at q* = 20
-make sure to show work and method for all of the questions.
Graphically:
(a) How many firms are supplying the market?
(b) What are the revenues, profits, and costs for the entire market and an individual firm? Make sure to show your work and method.
(c) What type of market is the above illustrating? Please explain.
(d) Show how a monopoly profit maximizes. Please explain how the results differ from that of a firm in perfect competition.
(e) From an efficiency standpoint explain why a Monopolist market is less efficient than a perfectly competitive market.
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Solution Summary
market structures, monopolies, and profit maximization
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(a) How many firms are supplying the market?
Since each firm sells 20 units, and the entire market sells 100,000, the number of firms is:
100,000/ 2500= 40
(b) What are the revenues, profits, and costs for the entire market and an individual firm? Make sure to show your work and method.
For the entire market, we can find the revenue by multiplying the quantity sold by the price. We are gives the equilibrium quantity of 100,000 and price of 25, giving us $2,500,000.
In the same way we find that for each firm total revenue is 25 * 2500= 62500.
For each firm, ...
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