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Problem:

Assume that in city there’re 100 indistinguishable self-service gasoline stations selling the similar kind of gasoline.

The total daily market demand function for the gasoline in market is the QD = 60,000 - 25,000P, where P is stated in dollars per gallon.
The daily market supply curve is the QS = 25,000 P for P $0.60.

Required:

1. How many number of gasoline stations would monopolist operate?

2. Can we say that the monopoly directs to a not as much of efficient employ of resources than perfect competition?  What is the amount of deadweight loss, if any?

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M910581

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