3. Technology for producing q gives rise to the cost function c(q) = aq+ bq². The marketdemand for q is p = a - Bq.(a) If a > 0, if b < 0, and if there are J firms in the industry, what is the short-run equilibriumemarket price and the output of a representative firm?(b) If a >0 and b< 0, what is the long-run equilibrium market price and number of firms?Explain.(c) If a > 0 and b >0, what is the long run equilibrium market price and number of firms?Explain.

*Answer: In the problem, market has J number of firms. Each firm will maximize its profit. It has…

(a) If a > 0, if b< 0, and if there are J firms in the industry, what is the short-ru lemarket price and the output of a representative firm? (b) If a > 0 and b< 0, what is the long-run equilibrium market price and numbe Explain. (c) If a > 0 and b >0, what is the long run equilibrium market price and numbe Explain.

(a) If a > 0, if b< 0, and if there are J firms in the industry, what is the short-ru lemarket price and the output of a representative firm? (b) If a > 0 and b< 0, what is the long-run equilibrium market price and numbe Explain. (c) If a > 0 and b >0, what is the long run equilibrium market price and numbe Explain.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.7P

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