Consider a perfectly competitive market inwhich there are 100 firms (producers) and 50consumers (buyers). Each of the 100 firms hasan identical total cost function ofTC(q) = 100+ 4q+5q². Each firm's marginalcost is, therefore, MC(q) = 4 + 10q. Each ofthe 50 consumers has the identical demandcurve given by q = 1 – 0.1P.If the market price in this market is $6, howmany units will each individual firm produce? Ifthe market price is $3.50, how many units?(Make sure they don't want to shut down.) Ingeneral, for any market price P, write down the"supply function" that describes how many unitseach individual firm will produce at that price.

perfectly competitive market is comprised of many identical firms that produce same products. The…

the market price is $3.50, how many units? Make sure they don't want to shut down.) In general, for any market price P, write down the 'supply function" that describes how many units each individual firm will produce at that price.

the market price is $3.50, how many units? Make sure they don't want to shut down.) In general, for any market price P, write down the 'supply function" that describes how many units each individual firm will produce at that price.

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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