Question

Suppose a perfectly competitive industry can produce Roman candles at a constant marginal cost of R12 per unit. Once industry is monopolized, marginal costs rise to R16 per unit because R4 per unit must be paid to lobbyists to ensure that only this firm receives a Roman candle license. Suppose the market demand for Roman candles is given by

Qd=1500-25P

And Marginal revenue curve by

MR= 20-Q/25

Calculate the perfectly competitive and monopoly outputs and prices (10 Marks)

Answer 1

Dear Mbilu, your question requires a lot of work, which neither of our experts is ready to perform for free. We advise you to convert it to a fully qualified order and we will try to help you. Please click the link below to proceed: Submit order