In a perfectly competitive and constant cost industry, all firms are identical. If the market demand function is: Qº = 600 – P, a typical firm's cost function is: TC 20q2 + 120q. a. In the long run, what is the firm's equilibrium production decision? b. In the long run, what is the market equilibrium price and quantity? What is the industry's long-run supply curve? In the long run, how many firms will stay in the industry? d. If the government decide to impost a $7 tax per unit, what is the new long-run equilibrium market price and quantity? e. How many firms are producing after the tax? q3 C.

In a perfectly competitive and constant cost industry, all firms are identical. If the market demand function is: Qº = 600 – P, a typical firm's cost function is: TC 20q2 + 120q. a. In the long run, what is the firm's equilibrium production decision? b. In the long run, what is the market equilibrium price and quantity? What is the industry's long-run supply curve? In the long run, how many firms will stay in the industry? d. If the government decide to impost a $7 tax per unit, what is the new long-run equilibrium market price and quantity? e. How many firms are producing after the tax? q3 C.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.1P: A firm in a perfectly competitive industry has patented a newprocess for making widgets. The new...

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