Consider a market with the following aggregate inverse demand function. P(Q)= 51

Question

Consider a market with the following aggregate inverse demand function.
P(Q)= 51-3Q
where Q is the aggregate quantity. Suppose the cost structure in this industry is
C(Q)= 3Q

Assume that the market is perfectly competitive. Solve for equilibrium price and quantity (P,Q). Also compute the resulting aggregate firm profit and consumer surplus.
1. What is equilibrium price?
a=3
b=2
c=1
d=1/2
e=1/4
f=none of the above

2. What is the equilibrium quantity(Q)?
a=6
b=12
c=18
d=16
e=14
f= none of the above

3. Compute the resulting firm profit
a=16
b=326
c=0
d=214
e=15
f= none of the above

4. Compute the consumer surplus
a=384
b=296
c=0
d=112
e=-112
f= none of the above

Assume the market is served by a monopoly
5. Solve for equilibrium price
a=3
b=12
c=25
d=15
e=27
f= none of the above

6. Solve for equilibrium quantity
a=16
b=8
c=12
d=9
e=27
f=none of the above

7. Compute the resulting firm profit
a=164
b=0
c=192
d=256
e=112
f= none of the above

8. Compute the Consumer Surplus?
a=96
b=25
c=48
d=0
e=112
f= none of the above

9= Compute the Lerner Index
a=0.89
b=0.75
c=3
d=0.84
e=0.13
f= none of the above

Explanation / Answer

1-a,2-d,3-d,4-c,5-e,6-d,7-b,8-a,9-d

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