1) Suppose you have a job analyzing a perfectly competitive market. The aggregate demand is D Q (p)= 72-_ 3 And the cost function for the (identical) firms is C(q)= 6q2+54 (a) Consider first a short scenario, and setup and solve the profit maximization problem over quantity. Write the quantity an individual firm will produce as a function of the sale price. (b) Solve for the price, quantity, and profits for each individual firm and then also for aggregate quantity in equilibrium when the number of firms is fixed at N = 32 (show your work) (c) Will these firms shutdown in the short run? Explain.
1) Suppose you have a job analyzing a perfectly competitive market. The aggregate demand is D Q (p)= 72-_ 3 And the cost function for the (identical) firms is C(q)= 6q2+54 (a) Consider first a short scenario, and setup and solve the profit maximization problem over quantity. Write the quantity an individual firm will produce as a function of the sale price. (b) Solve for the price, quantity, and profits for each individual firm and then also for aggregate quantity in equilibrium when the number of firms is fixed at N = 32 (show your work) (c) Will these firms shutdown in the short run? Explain.
Chapter2: Mathematics For Microeconomics
Section: Chapter Questions
Problem 2.2P
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning