Basic of Oligopoly and Monopoly Question Answer 2022

Running head: BASICS OF OLIGOPOLY AND MONOPOLY
Basics of Oligopoly and Monopoly
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BASICS OF OLIGOPOLY AND MONOPOLY
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Table of Contents
Answer to Question 3.A.............................................................................................................2
Answer to Question 3.B.............................................................................................................2
Answer to Question 3.C.............................................................................................................2
Answer to Question 4.A.............................................................................................................2
Answer to Question 4.B.............................................................................................................3
Answer to Question 4.C.............................................................................................................3
Answer to Question 4.D.............................................................................................................4
Answer to Question 5.A.............................................................................................................4
Answer to Question 5.B.............................................................................................................4
Answer to Question 5.C.............................................................................................................4
Answer to Question 5.D.............................................................................................................5
Answer to Question 5.E.............................................................................................................5
Answer to Question 6.................................................................................................................5
Answer to Question 7.................................................................................................................6
Answer to Question 8.................................................................................................................7
Reference....................................................................................................................................8

BASICS OF OLIGOPOLY AND MONOPOLY
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Answer to Question 3.A
All the firms are identical as their production and per unit price is same. This is the
main feature of perfect competition.
Answer to Question 3.B
Demand function: Q=70−P
Supply function: Q=−20+4 P
Equilibrium is when demand is equals to supply. Hence,
70−P=−20+ 4 P
5 P=90
P=18
Q=−20+4∗18
Q=−20+72=52
Hence, equilibrium price is 18 and quantity is 52.
Answer to Question 3.C
Producers surplus = 1
2∗52∗( 18− (−20 ) ) =988
Consumers surplus= 1
2∗52∗( 70−18 ) =1352
At equilibrium price and quantity the total surplus is maximised. Hence, the market is
I equilibrium when PS is 988 unit and CS is 1352 unit.
Answer to Question 4.A
Demand Function: Q=100−P