Consider a market with demand Q=110-p. The market has free entry. Each firm has acost function c) = 50 + 10q. (Hint: assume Cournot competition)a. How many firms will enter?b. What price will each be charging?c. What profit will each firm make, if any?d. What is the consumer surplus?e. What is the total welfare, consisting of the consumer surplus plus total profit of allfirms?f. Calculate total welfare if there was one firm less in the market.g. Explain in 100 words or less why you found that welfare increased or decreasedor did not change.Suppose that new firm with zero fixed cost and marginal cost of 30 wanted to enter themarket described in question 2, would it be able to do so profitably? Explain.

Given information Firm can enter freely in the market Market Demand Q=110-P Cost= 50 +10q

Consider a market with demand Q=110-p. The market has free entry. Each firm has a cost function c(q) = 50 + 10q. (Hint: assume Cournot competition) a. How many firms will enter? b. What price will each be charging? c. What profit will each firm make, if any? d. What is the consumer surplus? e. What is the total welfare, consisting of the consumer surplus plus total profit of al firms? f. Calculate total welfare if there was one firm less in the market. g. Explain in 100 words or less why you found that welfare increased or decreased or did not change.

Consider a market with demand Q=110-p. The market has free entry. Each firm has a cost function c(q) = 50 + 10q. (Hint: assume Cournot competition) a. How many firms will enter? b. What price will each be charging? c. What profit will each firm make, if any? d. What is the consumer surplus? e. What is the total welfare, consisting of the consumer surplus plus total profit of al firms? f. Calculate total welfare if there was one firm less in the market. g. Explain in 100 words or less why you found that welfare increased or decreased or did not change.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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