The inverse demand curve is given by and a monopolist
has a fixed supply of 4 units of a good available.
How much will it sell and what price will it set?
What would be the price and output in a competitive market with these demand and supply characteristics?
What would happen if the monopolist had 6 units of the good available? (Assume free disposal.)
The monopolist will sell 4 units of the good at the price determined by the inverse demand curve. In a competitive market, the price would be determined by the intersection of the demand and supply curves, and the output would be 4 units. If the monopolist had 6 units of the good available, they would sell 6 units at the price determined by the inverse demand curve.
