3. Draw a graph a supply and demand graph for a perfectly competitive market. Label the curves and equilibrium price and

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3 Draw A Graph A Supply And Demand Graph For A Perfectly Competitive Market Label The Curves And Equilibrium Price And 1 (78.02 KiB) Viewed 27 times

3. Draw a graph a supply and demand graph for a perfectly competitive market. Label the curves and equilibrium price and quantity. In a separate graph, do the same for a firm with market power (3 points) (a) Now assume consumers become less price sensitive (i.e. the demand curve becomes more inelastic), but this change does not affect the quantity demand at the equilibrium price (in other words, the market equilibrium does not change) (An example of this might be a prescription drug with some substitutes is taken off the market). Draw the new demand curves (label this D2) and, for the firm with market power, the marginal revenue curve (MR2). Show and explain how this affects the equilibrium price and quantity for the firm with market power. Label the new price P, and the new quantity Q2 (3 points)