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Suppose that there are n firms in a market, labeled i = 1, ..., n, with no fixed costs and marginal costs (mc) as described
Suppose that there are n firms in a market, labeled i = 1, ..., n, with no fixed costs and marginal costs (mc) as described in the three cases below. They are willing to supply up to one unit of a good at their marginal cost. For each case, provide a (qualitative) graph of the aggregate supply curve.
- (6 points) Case 1: mci = 1 for i = 1,...,n
- (6points)Case2: mci =1 (i/n) for i=1,...,n
- (6 points) Case 3: mci = 1 + aqi2 for i = 1, ..., n, where qi is the quantity that they produce and a > 0.
- (6 points) Is there a concept analogous to consumer surplus that we could define here? Explain.
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