Suppose that there are 10 identical firms in a perfectly competitive market. Each firm has a total cost function of TC = 560 + 0.25q2, where q is a firm’s output. The market demand function is QD = 480 – 4P, where P is the price per unit of output and QD is total market demand a) Derive the market direct supply equation (QS = f(P)) b) Calculate the short run equilibrium market price (P*) and total quantity (Q*) in the market c) Determine the profit-maximizing quantity (q*) that each firm would produce

Suppose that there are 10 identical firms in a perfectly competitive market. Each firm has a total cost function of TC = 560 + 0.25q2, where q is a firm’s output. The market demand function is QD = 480 – 4P, where P is the price per unit of output and QD is total market demand a) Derive the market direct supply equation (QS = f(P)) b) Calculate the short run equilibrium market price (P) and total quantity (Q) in the market c) Determine the profit-maximizing quantity (q*) that each firm would produce

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.14P

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