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Under patent protection, a company has a monopoly in the production of a high tech component. Market demand is estimated to be: P = 100 - 0.2Q. The company's economic costs are given by: AC = MC = $60 per component.
a) Calculate the company's output and price.
b) After the company's patent expires, predict the new market output and price. (Suppose that competing suppliers have the same economic costs as the original producer.) Compute the resulting change in consumer surplus.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9309735

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