Chapter #3: Welfare Economics - Agricultural and Resource ...
Chapter #3: Welfare Economics - Agricultural and Resource ...
Chapter #3: Welfare Economics - Agricultural and Resource ...
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Linear Example of Monopoly<br />
inverse dem<strong>and</strong> = P(Q) = a - bQ<br />
revenue = (a - bQ)Q = aQ-bQ 2<br />
supply = c + dQ<br />
competitive outcome = a - bQ = c + dQ<br />
Under monopoly,<br />
Q c =<br />
a − c<br />
b + d<br />
P c = a −<br />
P c =<br />
4<br />
ba − bc<br />
b + d<br />
ad + bc<br />
b + d .<br />
a − 2bQ = c + dQ<br />
Q M =<br />
a − c<br />
2b + d