Consider a perfectly competitive industry with the following information Market
ID: 1202010 • 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)How many firms are there in the industry. Show work 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)
How many firms are there in the industry. Show work 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)
How many firms are there in the industry. Show work
Explanation / Answer
Market demand - p =( Q/40) - 30
Market demand P = 30 - (Q/40)
Revenue = Price X quantity
R = (30 - Q/40)Q
R = 30Q - Q2 /40
Marginal revenue = 30 - 2Q/40
Marginal revenue = 30 - Q/20
Cost = 0.5(q^2)-10q+200
Marginal cost = Q - 10
MR =MC
30 - Q/20 = Q - 10
40 = Q - Q/20
40 = 0.95Q
Q = 42.10
Price = Marginal revenue
P = 30 - Q/20
P = 30 - ( 42.10/20)
Price = $ 27.895
---------------------------------------------------------------------------------
To find the number of firms in the industry
Market demand - p = (Q/40) - 30
P = 30 - ( Q/40)
Q/40 = 30 - P
Q = 1200- 40P
QM = 1200 - 40 X $ 27.895
QM = 84.20
Each firm produces 42.10 Units
Number of firms in the industry = 84.20 / 42.10
Number of firms in the industry = 2 .
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.