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Homework answers / question archive / The graph below shows the demand faced by NorthCo, a monopolist, which incurs only fixed costs and therefore has a marginal cost equal to zero

The graph below shows the demand faced by NorthCo, a monopolist, which incurs only fixed costs and therefore has a marginal cost equal to zero

Economics

The graph below shows the demand faced by NorthCo, a monopolist, which incurs only fixed costs and therefore has a marginal cost equal to zero. Note: If necessary round your answers to two decimal places. a) Suppose that a new firm, which also has zero marginal costs, enters this industry and assumes that NorthCo will continue to produce its current output. Plot the existing firm's marginal revenue line, new firm's marginal revenue line, and new firm's demand line. Marginal Revenue 36 (28,37) 32 28 Demand 24 Cost ($) 20 16 12 87 4+ 0 6 12 18 24 30 36 42 48 54 60 66 72 78 Units of Output Reset b) Before the new firm disrupted North Co's monopoly what was the price NorthCo charged, and what quantity of output did it produce? Price = $ 0 Output = 0 c) What output will the new firm choose to produce, and what will be the new market price, given both firms' output? New Market Price = $ 0 New Firm's Output = 0

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