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PROBLEM 1Large number of buyers- Perfect competition/ MonopolisticLarge number of sellers- Perfect competition/ MonopolisticImperfect information- MonopolyFree entry and exit- perfect competition/ monopolisticOpportunity for economic profits- perfect competitionProduct differentiation- monopolisticSmall individual market power- MonopolyPROBLEM 2QD= 5000-10P Price0500Quantity demanded50000QS= -600+4PPrice 0150Quantity supplied-6000Price500Qs=-600=4PP*Qd= 5000-10P-6000Q*5000quantityEquilibrium quantity and priceAt equilibrium, quantity demanded= quantity supplied, QD=QS5000-10P= -600+4P5600=14P, P=5600/14P= $400.Hence equilibrium quantity= Q= -600+(4*400) = -600+1600Q=1000 unitsBased on the information in a) and b) above, the consumer has more market power. This is expressed by the demand eq...
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