2. Assume that the market for G.I. Jane dolls is perfectly competitive. The market is known to be characterized by the following demand and supply equations (not necessarily in that order): P = 90 – 0.1Q and Q =-500 + 25P All firms are known to be identical, with fixed capital cost of 10, and VC; = 20Q; + 2Q? Answer the following: a) Which is the demand (or inverse demand), which is the supply (or inverse supply)? Why? b) Calculate the equilibrium market P and Q. c) How much will each firm produce and what is the profit or loss of each firm? How many firms are there?

2. Assume that the market for G.I. Jane dolls is perfectly competitive. The market is known to be characterized by the following demand and supply equations (not necessarily in that order): P = 90 – 0.1Q and Q =-500 + 25P All firms are known to be identical, with fixed capital cost of 10, and VC; = 20Q; + 2Q? Answer the following: a) Which is the demand (or inverse demand), which is the supply (or inverse supply)? Why? b) Calculate the equilibrium market P and Q. c) How much will each firm produce and what is the profit or loss of each firm? How many firms are there?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 11PA: Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2...

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