2. Consider a market with 90 firms, each firm has a short-run total cost function as follows: TC(q) = 5q2, and a marginal cost function: MC(q) = 10q. Market demand is given by equation Qd(p) = 200 - p. a. Solve for the short-run equilibrium outcome: P*, Q* and q*. b. What is one firm's economic profit in this market? c. Consider a different market structure, where there is only one firm, interpreted as a monopolist, and then critically discuss the impact on equilibrium price and quantity. Discuss total surplus for these two types of market structures.
2. Consider a market with 90 firms, each firm has a short-run total cost function as follows: TC(q) = 5q2, and a marginal cost function: MC(q) = 10q. Market demand is given by equation Qd(p) = 200 - p. a. Solve for the short-run equilibrium outcome: P*, Q* and q*. b. What is one firm's economic profit in this market? c. Consider a different market structure, where there is only one firm, interpreted as a monopolist, and then critically discuss the impact on equilibrium price and quantity. Discuss total surplus for these two types of market structures.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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2. Consider a market with 90 firms, each firm has a short-run total cost function as
follows: TC(q) = 5q2, and a marginal cost function: MC(q) = 10q. Market demand is
given by equation Qd(p) = 200 - p.
a. Solve for the short-run equilibrium outcome: P*, Q* and q*.
b. What is one firm's economic profit in this market?
c. Consider a different market structure, where there is only one firm, interpreted as a monopolist, and then critically discuss the impact on
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