Suppose that thepersonal computerindustry is characterized by a very large producer, Enormous Personal Computer, Inc., and 10 other firms in a competitive fringe that produce clones of EPC's computers. Demand for personal computer is given by:

Q = -10p + 40,000

EPC can product PCs at a constant marginal cost of $1,200 having fixed costs of $2,000, while firms in the competitive fringe face increasing marginal cost, given by:

MC = q + 400

26 - What is the inverse demand function?

a.P = 40,000 - 10Q

b.P = 4,000 - 10Q

c.P = 40,000 - Q/10

d.P = 4,000 - Q/10

e.Some answer other than the above or cannot be determined.

27 - Assume that each member of the competitive fringe acts as a price taker. Find each firms' supply function. What is the supply curve of all the competitive fringe firms?

a.QF = 4,000 - P/10

b.QF = 40,000 - P/10

c.QF = 10/P - 4,000

d.QF = 10 P + 4,000

e.Some answer other than the above or cannot be determined.

28 - EPC know the supply functions of the competitive fringe firms. Let M represent EPC's output. Find EPC's inverse demand curve, taking into account the behavior of the fringe firms.

a.P = 2,200 - M/20

b.P = 1,800- M/10

c.P = 1,800 - M/20

d.P = 2,200 - M/10

e.Some answer other than the above or cannot be determined.

29- EPC's equilibrium price and output are

a.$2,200 and 18,000

b.$1,600 and 12,000

c.$1,000 and 30,000

d.$1,800 and 22,000

e.Some answer other than the above or cannot be determined.

30 - How many PCs will be supplied by each competitive fringe firm?

a.600

b.800

c.1,000

d.1,800

e.Some answer other than the above or cannot be determined.

31 - What is total output of EPC and the Fringe firms?

a.16,000

b.20,000

c.24,000

d.30,000

e.Some answer other than the above or cannot be determined.

32 - If EPC price at marginal cost, what will be the increase in consumer surplus?

a.$ 12.6 million

b.$16.2 million

c.$28.8 million

d.45.0 million

e.Some answer other than the above or cannot be determined.

33 - If EPC left the market, what will Q be in the short run?

a.18,000

b.20,000

c.22,000

d.24000

e.Some answer other than the above or cannot be determined.

34 - If EPC left the market, what will the level of consumer surplus be?

a.$ 12.6 million

b.$16.2 million

c.$28.8 million

d.45.0 million

e.Some answer other than the above or cannot be determined.

35. If the competitive firms were in long run equilibrium when EPC st market price when EPC exits the industry then

a.In the long run firms will exit and price will rise

b.In the long run firms will exit and price will fall

c.In the long run firms will enter and price will rise

d.In the long run firms will enter and price will fall

e.Some answer other than the above or cannot be determined.

Please solve. Explain your answers in details. Show all the work. Do not copy from other solutions as they are are not clear or they are wrong. Thank you.