Consider a perfectly competitive industry with the following information Market
ID: 1202009 • Letter: C
Question
Consider a perfectly competitive industry with the following information Market demand - p=(Q/40) -30 There is an unknown number of firms with identical cost structure given by C=.5(q^2)-10q+200 Each firm is earning zero profits (it is a long run equilibrium)A) find the market price p and the market output Q Consider a perfectly competitive industry with the following information Market demand - p=(Q/40) -30 There is an unknown number of firms with identical cost structure given by C=.5(q^2)-10q+200 Each firm is earning zero profits (it is a long run equilibrium)
A) find the market price p and the market output Q Market demand - p=(Q/40) -30 There is an unknown number of firms with identical cost structure given by C=.5(q^2)-10q+200 Each firm is earning zero profits (it is a long run equilibrium)
A) find the market price p and the market output Q
Explanation / Answer
Cost curve is given by
C = 0.5q^2 - 10q + 200
We will have to differentiate it wrt q
dC/dq = q -10
equating that to zero we get q = 10
C = 0.5*100 -100 + 200
C = 150
Now P = (Q/40) -30
P = Q -1200
Q = P + 1200
So output is 1200 + 150 = 1350
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