QUESTION 2 The long-run total cost function for producers of mineral water is LRTC (Q) = rQ, where Q is the output of an individual firm expressed as thousands of liters per year. The market demand curve is D(p) = a – ßp. (a) Find the long-run equilibrium price and quantity in terms of a, ß, and y. (b) Can you determine the equilibrium number of firms? If so, what is it? If not, why not?

QUESTION 2 The long-run total cost function for producers of mineral water is LRTC (Q) = rQ, where Q is the output of an individual firm expressed as thousands of liters per year. The market demand curve is D(p) = a – ßp. (a) Find the long-run equilibrium price and quantity in terms of a, ß, and y. (b) Can you determine the equilibrium number of firms? If so, what is it? If not, why not?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.9P

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