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A market is described by the following cost structure and demand equation: MC= 2q Qd 100 -5p 1) What is the equilibrium if this market is perfectly competitive? 2) What is the equilibrium of this market if it becomes a monopoly? 3) What would be the subsidy that would fix the market failure induced by the existence of the monopoly? population of consumers for the good that the monopoly sells arises and Assume that a new it has the following demand: 1 Qd =20 P 4) Would it be profitable for the monopoly to apply third degree price discrimination? Show algebraically your answer
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