Question
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?
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a To find the shortrun equilibrium profit of each firm we first need to find the market equilibrium ...Get Instant Access to Expert-Tailored Solutions
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Modern Principles of Economics
Authors: Tyler Cowen, Alex Tabarrok
3rd edition
1429278390, 978-1429278416, 1429278412, 978-1429278393
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