Questions on competitive firm, price setting firm and price elasticity of demand Questions 1 Suppose that there are 1 0 0 identical firms in a perfectly competitive industry Each firm has a short run total cost function given by C ( q ) 0 2 q 2 4 q 1 0 a Calculate a typical firm s short run supply curve as a function of market price ( P ) b Calculate the short run industry ( market ) supply curve c Suppose that market demand is given by Q 4 0 0 0 2 5 0 p What will be the short run market equilibrium and price quantity

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Questions on competitive firm, price setting firm and price elasticity of demand Questions 1 . Suppose that there are 1 0 0 identical firms in

Questions on competitive firm, price setting firm and price elasticity of demand

Questions

1 .

Suppose that there are

100

identical firms in a perfectly competitive industry. Each firm has a short

-

run total cost function given by:

(

) = 0.2

2 + 4

+ 10

.

Calculate a typical firm

s short

-

run supply curve as a function of market price

(

) .

.

Calculate the short

-

run industry

(

market

)

supply curve.

.

Suppose that market demand is given by Q

= 4000 - 250

.

What will be the short

-

run market equilibrium and price

-

quantity?

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