Suppose the demand function for widgets is Q(p) = 60 – p, and all firms that produce widgets have total cost function C(q) = 16 + q^3.a) Suppose that the market is perfectly competitive and there is free entry and exit. All firms that enter use the same technology. A firm that decides to stay out of the market can avoid paying the fixed cost and has a profit of zero. Solve for the long-run competitive equilibrium. What is the long-run equilibrium price? What is the quantity produced by each firm? How many firms will produce in this market?b) What is the consumer surplus under the perfectly competitive model?
Suppose the demand function for widgets is Q(p) = 60 – p, and all firms that produce widgets have total cost function C(q) = 16 + q^3
.
a) Suppose that the market is perfectly competitive and there is free entry and exit. All firms that enter use the same technology. A firm that decides to stay out of the market can avoid paying the fixed cost and has a profit of zero. Solve for the long-run competitive equilibrium. What is the long-run equilibrium price? What is the quantity produced by each firm? How many firms will produce in this market?
b) What is the consumer surplus under the perfectly competitive model?
Expert Answer
Related Economics Q&A
Q: What is an isoquant? What is a marginal product? What is the technical rate of substitution? Explain...
A: Utility: The utility is the power or ability of the goods and services that satisfy the consumers wa...
Q: q22-Ginger's utility function is U(x,y)=2x^2y. She has income I=2000 and faces prices Px=$20 and Py=...
A: Budget line equation can be derived as follows.
Q: Explain why it is unrealistic to regulate a natural monopoly for a price and quantity that maximizes...
A: Natural monopoly:The natural monopoly is the market structure, which is characterized by high fixed ...
Q: A generalization of the fisher effect that can be applied to other variables is the relationship bet...
A: It is given that,According to the fisher’s effect, the real price growth is equal to the difference ...
Q: Unemployment and the Labor ForceALFRED Il Cvillan Labor Force Participation Rate: 16 to 19 years Vin...
A: Hi, you will be able to see exact value of peaks if you go to AlFred site and use the following path...
Q: Suppose that a nation decides to introduce a new income tax system with the tax brackets shown in th...
A: Since you have not mentioned the sub-parts you need help with and since we are entitled to answer up...
Q: Does the fact that your bank keeps only a fraction of your account balance in reserve worry you? Why...
A: Step 1The bank is a financial institution that focuses on accepting the deposit and making progress ...
Q: The tables show the spending and revenue for Littleland in 2010. Use the tables and other informatio...
A: Little land Borrow:Little land Borrow can be calculated as follows:
Q: 1. The Fed's job in manipulating monetary policy is made harder by the fact that: A) monetary author...
A: Answer 1: The correct option is C. Reason:The central bank of the U.S. (fed) aims at manipulating th...
