A local business in a small college town has a major portion of their business t

Question

A local business in a small college town has a major portion of their business to college bookstore. On the side they also provide services to other local businesses. The local demand is Q=200-5P. The average and marginal cost is $8. a. Calculate output, price, and profit under the monopoly consditions they enjoy b. To test other markets, they contemplate opening a retail outlets in several college towns where there will be other competitors. CAlculate price and output under this condition if it is perfectly competitive

Explanation / Answer

Monopoly Output:80 Price:$24 Profit:$1280 Perfectly Competitive: Output:160 Price:$8

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