Suppose that the market demand for mountain spring water is given as follows: P = 1200 - Q Mountain spring water can be produced at no cost.
a. What is the profit maximizing level of output and price of a monopolist?
b. What will be the level of output and price in the long run if this industry were perfectly competitive?
c. What level of output would be produced by each firm in a Cournot duopoly in the long run? What will the price be?