This single firm will be the monopoly and produces at the monopolist output n 26, resulting th e mondO oly price Pm =2. The monopoly profit is IIm= As long as Im >0, a firm will enter and that is the only firm in the industry. A nswer 2.6. We have (a-y)dy-ncun - nk=5[a-(a-nyn)2]-cnyn nK d-c 2K n+1 n+1 d-c + x2 n+ 11-21-2 n -c)2-nK [1-(1-)2](a-c) K where The implying 1 (a-c)2 Imp 2/3 /3 EndThis single firm will be the monopoly and produces at the monopolist output qm = a−c 2b , resulting the monopoly price pm = a+c 2 . The monopoly profit is Πm = (a − c)2 4b − K. As long as Πm ≥ 0, a firm will enter and that is the only firm in the industry. Answer 2.6. We have W(n) = ] nyn 0 (a − y)dy − ncyn − nK = 1 2  a2 − (a − nyn) 2  − cnyn − nK = 1 2 % a2 −  a − n a − c n + 12 & − cn a − c n + 1 − nK = n n + 1 a(a − c) − 1 2  n a − c n + 12 − cn a − c n + 1 − nK = n n + 1(a − c) 2 − 1 2  n a − c n + 12 − nK = 1 2 % 2 n n + 1 −  n n + 12 & (a − c) 2 − nK = 1 2  1 − (1 − γ) 2  (a − c) 2 − γ 1 − γ K, where γ ≡ n n+1 . Then, 0 = ∂W ∂γ = (1 − γ)(a − c) 2 − K (1 − γ)2 , implying γo = 1 −  K (a − c)2 1/3 , implying no = γo 1 − γo = 1 − k K (a−c)2 l1/3 k K (a−c)2 l1/3 = (a − c)2/3 K1/3 − 1. End 2—9