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1/ Consider a perfectly competitive market that has 4 firms in it (assume it is perfectly competitive despite their being only 4 firms). Two of the firms use technology A and two of the firms use technology B. The respective costs of producing using technology A and B are given by the cost functions: CA (9A) = 10 + 2qA + 39A² CB (9B) = 3 +39B + 2qB² Demand is given by QD (P) = 20 – P. a) Determine short run equilibrium, b) Determine the optimal outputs for each type of firm. c) Determine the equilibrium quantity for the market as a whole.

1/ Consider a perfectly competitive market that has 4 firms in it (assume it is perfectly competitive despite their being only 4 firms). Two of the firms use technology A and two of the firms use technology B. The respective costs of producing using technology A and B are given by the cost functions: CA (9A) = 10 + 2qA + 39A² CB (9B) = 3 +39B + 2qB² Demand is given by QD (P) = 20 – P. a) Determine short run equilibrium, b) Determine the optimal outputs for each type of firm. c) Determine the equilibrium quantity for the market as a whole.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1/ Consider a perfectly competitive market that has 4 firms in it (assume it is perfectly competitive despite their being only 4 firms). Two of the firms use technology A and two of the firms use technology B. The respective costs of producing using technology A and B aregiven by the cost functions: Demand is given by QD(P)-20-1P a) Determine short run equilibrium, b) Determine the optimal outputs for each type of firm. c) Determine the equilibrium quantity for the market as a whole. d) Determine the equilibrium price. e) Calculate equilibrium profits for each type of firm What will we expect to happen in the long run? Will other firms enter? Will price stay the same? How will this impact the two types of firms differently? Will both technologies be used in the long run?
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