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Please help me with this problem, this is the complete problem: Consider the following competitive industry that produces one good. All producers in the industry
Please help me with this problem, this is the complete problem:
Consider the following competitive industry that produces one good. All producers in the industry have the same cost function c(y) 62.5 + 2.5y2 + 15!} This cost function applies in both the short run and the long run in the industry. 3204p 85 if y O if y > O Suppose aggregate demand for the good is D(p) 0 for p > 85 1. What is a producer's relevant (non-sunk) cost in this industry? 2. Find the producers' individual supply functions Si(p). 3. In the short run with N = 10 identical firms, what is the aggregate supply function SIO(p)? 4. What is the short-run equilibrium (p* , Q* ) with N 10 firms? 5. In the short-run equilibrium with ten firms, what is the producer's surplus for each individual firm? 6. Now suppose the number of firms in the short run is N 30. What is the short-run aggregate supply function S 30 What is the short-run equilibrium (p* , Q* ) with N 30 firms? Compute the producer's surplus for each individual firm in the the short-run equilibrium with thirty firms. 7. In the long run, what is the competitive equilibrium (i.e equilibrium price p and quantity traded Q)? What is the number of firms (N* ) in the long run? 8. How much producer's surplus does each of the N* firms earn in the long-run competitive equilibrium? Now suppose aggregate demand in the output market shifts. The new aggregate demand function is 1702p for ps 85, o for p > 85, 9. What is the short-run competitive equilibrium (p* , Q* ) with N 30 firms? Compute the producer's surplus for each individual firm in the short-run equilibrium with thirty firms. 10. How is the long-run competitive equilibrium affected by the shift in demand? What are the equilibrium price, quantity traded, and number of firms in the new long-run equilibrium? What is the producer's surplus of each firm that is active in this industry?
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