Suppose which in a city there are 100 identical self-service gasoline stations selling the same type
Suppose which in a city there are 100 identical self-service gasoline stations selling the same type of gasoline.
The total daily market demand function for gasoline in the market is QD=60,000-25,000P, where P is expressed in dollars per gallon.
The daily market supply curve is QS=25,000P for P$0.60.
1) How many gasoline stations would the monopolist operate?
2) Can we say which the monopoly leads to a less efficient use of resources than perfect competition? Illustrate what is the amount of the deadweight loss, if any?