Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. (20%) Consider a competitive market whose demand is given by Q(P) = 250-10P. There are 100 identical firms in the market, each producing

 

1. (20%) Consider a competitive market whose demand is given by Q(P) = 250-10P. There are 100 identical firms in the market, each producing with a technology characterized by the total cost function, TC(q) = 9+9+q, where q denotes the quantity produced by each firm. a. (10%) How much profit does each firm make in the shorn-run equilibrium? b. (10%) In the long run, firms can freely enter or exit the market. How many firms are there in the market when it reaches the long-run equilibrium?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

a To find the shortrun equilibrium profit of each firm we first need to find the market equilibrium ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Modern Principles of Economics

Authors: Tyler Cowen, Alex Tabarrok

3rd edition

1429278390, 978-1429278416, 1429278412, 978-1429278393

More Books

Students also viewed these Economics questions