Question

 Consider a market with one large firm and many small firms. The supply curve of the small firms

taken together is

() = 100 +

The demand curve for the product is

() = 200 −

The cost function for the one large firm is

() = 25.

a) Suppose that the large firm is forced to operate a zero level of output. What will be the

equilibrium price? What will be the equilibrium quantity?

b) Suppose now that the large farm attempts to exploit its market power and Seth a profit

maximizing price. In order to model this we assume that customers always go first to the

competitive forms and by as much as they are able to you and then go to the large farm. In this

situation, find out equilibrium price,the quantity supplied by the large firm and the equilibrium

quantity supplied by the competitive firms.

c) What will be the large firm's profits ?

d) Finally suppose that the large farm could force the competitive farms out of the business and

behave as a real monopolist. What will be the equilibrium price? What will be the equilibrium

quantity? What will be the large firm's profits?​

Answer 1

Answer:

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