Consider a dominant firm facing an inverse demand P=100-Q, with marginal cost 18. The supply of competitive fringe is P=10+4Q. In equilibrium, the price-cost margin for the dominant firm is 0.64.
Q1) Find the outputs of dominant firm and competitive fringe.
* Show the calculations!!!
Q2) Suppose the supply of competitive fringe is P=10+2Q. What is the price-cost margin for the dominant firm?
*Show the calculations!!!
Q3) What is the price-cost margin for a monopoly facing the same demand and marginal cost?
*Show the calculations!!!