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Suppose the demand curve for widgets is P = 30 - 3Q and marginal cost is P = 10 + 2Q

Marketing Jan 14, 2021

Suppose the demand curve for widgets is P = 30 - 3Q and marginal cost is P = 10 + 2Q. Suppose also that the industry is monopolized. The Dept. of Justice, Antitrust division takes the industry to court, claiming that because if the deadweight loss generated by the monopoly the court should break up the monopoly. Counsel for the defense argues that, in the absence of monopoly power, the supply curve would actually be P = 15 + 2Q. Why might the defense argue this, and if the defense is right, would that argument be sufficient to justify a ruling in their favor?

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