Assume, in a microeconomic context, the following demand for a given product:
P=150-6Q
1) Assuming a perfect competition market where supply is given by P=50+4Q, compute and draw the marginal revenue for a company operating in this market.
2) Assuming instead a monopoly setting, compute the optimal production for the monopolist and show how a greater level of production, compared to the optimal, would lead to a decrease in profit. Assume the total cost of the monopolist is given by TC=50Q+2Q2.
3) Using the above functions, show how the monopolist produces a lower quantity of equilibrium as opposed to a perfect competition setting. Discuss.
4) What happens if a new entrant manages to enter the market that was previously operating in a monopolistic setting? Explains the potential scenarios.
