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Assume that there are 1,000 bakers who buy flour. The marginal revenue product for each baker is given below (where Q= quantity of flour). Further,
Assume that there are 1,000 bakers who buy flour. The marginal revenue product for each baker is given below (where Q= quantity of flour). Further, assume the baker market is perfectly competitive. MRPF=600.01Q a. Assume that each baker's inverse demand for flour is simply the marginal revenue product for flour. What is the market demand for flour? (Hint: Each baker has the same demand for flour equation and there are 1000 bakers in the market) b. Assume the market supply of flour is given by QS=150,000P. What is the market price of flour? c. Given the price from part b, how many units of flour will each baker choose to purchase (NOTE: I am looking for the individual baker's quantity, not the market quantity). d. Assume there is a fall in the price of bread, so the marginal revenue product falls so that MRPF=600.02Q. What is the new price of flour? How many units of flour will each individual baker purchase
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