BUS 311 – Business Environment and Public Policy The cost function for a single plant is: C(q) = 5q The market demand curve is P = 1005 – Q Find the long-run competitive equilibrium price (1 pt) and output (1 pt)

BUS 311 – Business Environment and Public Policy

The cost function for a single plant is:

C(q) = 5q

The market demand curve is

P = 1005 – Q

1. Find the long-run competitive equilibrium
   1. price (1 pt) and
   2. output (1 pt).
   3. Illustrate graphically (1 pt).
   4. What is consumers’ surplus in competitive equilibrium? (1 pt)
2. If the industry is monopolized, find the:
   1. price (1 pt) and
   2. output (1 pt).
   3. Illustrate graphically (1 pt).
   4. How much profit does the monopolist make? (1 pt)

  3.  What is the welfare loss under monopoly? (2 pts)