A perfectly competitive industry has a large number of potential entrants. Short-Run totalcost is STC-0.1q²+40 and all firms have identical cost structure. They all minimize cost atthe same point where Min AC-MC and are at their long run equilibrium.1-Find the quantity and the cost of every firm at that point.If total market demand is P = 12-6002.2-Find the total quantity demanded in the market and the corresponding number of firms.3-Derive the market supply curve and calculate the total Welfare (CS+PS) in this market.Due to an increase in Income consider that demand shifted to P = 15-6000.4-What will be the new market equilibrium price and quantity? What will be the output/firmin the short-run?Since entry and exit is possible in the long-run cost.5-What should the new number of firms become to satisfy this quantity and derive the newmarket supply?Go back to the original case where P = 12-600 and if the government imposes a $2/unittax on this market.7-What should be the new equilibrium price and quantity? Who pays more of the tax thesuppliers or the consumers?8-Calculate the new social welfare, the government revenue and the DWL.Instead of the tax the government decides to open the market for international competitionwhere the price is $2 and impose a $1/unit tariff.9-Calculate the increase in the original welfare and then the reduction in welfare due to thetariff.10-Calculate the government revenue and the DWL from the tariff.

The following information is given in the task: The market is perfectly competitive and the firm's…

A perfectly competitive industry has a large number of potential entrants. Short-Run total cost is STC=0.1q²+40 and all firms have identical cost structure. They all minimize cost at the same point where Min AC-MC and are at their long run equilibrium. 1-Find the quantity and the cost of every firm at that point. If total market demand is P = 12-600l. 2-Find the total quantity demanded in the market and the corresponding number of firms. 3-Derive the market supply curve and calculate the total Welfare (CS+PS) in this market.

A perfectly competitive industry has a large number of potential entrants. Short-Run total cost is STC=0.1q²+40 and all firms have identical cost structure. They all minimize cost at the same point where Min AC-MC and are at their long run equilibrium. 1-Find the quantity and the cost of every firm at that point. If total market demand is P = 12-600l. 2-Find the total quantity demanded in the market and the corresponding number of firms. 3-Derive the market supply curve and calculate the total Welfare (CS+PS) in this market.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A perfectly competitive industry has a large number of potential entrants. Short-Run total
cost is STC-0.1q²+40 and all firms have identical cost structure. They all minimize cost at
the same point where Min AC-MC and are at their long run equilibrium.
1-Find the quantity and the cost of every firm at that point.
If total market demand is P = 12-6002.
2-Find the total quantity demanded in the market and the corresponding number of firms.
3-Derive the market supply curve and calculate the total Welfare (CS+PS) in this market.
Due to an increase in Income consider that demand shifted to P = 15-6000.
4-What will be the new market equilibrium price and quantity? What will be the output/firm
in the short-run?
Since entry and exit is possible in the long-run cost.
5-What should the new number of firms become to satisfy this quantity and derive the new
market supply?
Go back to the original case where P = 12-600 and if the government imposes a $2/unit
tax on this market.
7-What should be the new equilibrium price and quantity? Who pays more of the tax the
suppliers or the consumers?
8-Calculate the new social welfare, the government revenue and the DWL.
Instead of the tax the government decides to open the market for international competition
where the price is $2 and impose a $1/unit tariff.
9-Calculate the increase in the original welfare and then the reduction in welfare due to the
tariff.
10-Calculate the government revenue and the DWL from the tariff.

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