A firm in a perfectly competitive market has a short-run total cost curve of ST C(Q) = 20 + 10Q + Q 2 . The
A firm in a perfectly competitive market has a short-run total cost curve of ST C(Q) = 20 + 10Q + Q2. The market price is $10.
a) What is the profit-maximizing quantity?
b) What are the maximum profits?
c) Find the short-run supply curve if all fixed costs are sunk.
d) Find the short-run supply curve if all fixed costs are non-sunk.
e) Suppose there are 100 identical firms in this market. What is the market supply curve if all fixed costs are sunk?
f) Write down a market demand curve that is consistent with this equilibrium.
Step by Step Solution
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Step: 1
a To find the profitmaximizing quantity we need to determine where marginal cost MC equals marginal revenue MR In a perfectly competitive market the f...
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Authors: walter nicholson, christopher snyder
11th edition
9781111784300, 324599102, 1111784302, 978-0324599107
