a quasi-fixed cost of $5000 (that is COST = 0 if they exit but COSTS = 5000 + variable costs if they are open). Hence Cost = q² + 5000 if active. Individual demand is Qº= 100 - P (a) Let there be n = 100 firms and 500 consumers. What is the equilibrium market price, output per firm, and consumption per consumer given the fixed number of firms? Show and explain. (b) Find each consumer's Consumer Surplus. Show your work. (c) Find profits per firm. What does this imply for entry/exit decisions? Show your work. (d) Now let the number of firms change so that each firm's profits are zero. How many firms will there be in the long-run equilibrium? Show and explain why the long-run equilibrium price is $141.42. (e) Now suppose the number of consumers rises to 1000. Show and explain what happens to long- run equilibrium price and number of firms. Explain the idea behind the result.

a quasi-fixed cost of $5000 (that is COST = 0 if they exit but COSTS = 5000 + variable costs if they are open). Hence Cost = q² + 5000 if active. Individual demand is Qº= 100 - P (a) Let there be n = 100 firms and 500 consumers. What is the equilibrium market price, output per firm, and consumption per consumer given the fixed number of firms? Show and explain. (b) Find each consumer's Consumer Surplus. Show your work. (c) Find profits per firm. What does this imply for entry/exit decisions? Show your work. (d) Now let the number of firms change so that each firm's profits are zero. How many firms will there be in the long-run equilibrium? Show and explain why the long-run equilibrium price is $141.42. (e) Now suppose the number of consumers rises to 1000. Show and explain what happens to long- run equilibrium price and number of firms. Explain the idea behind the result.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Only part (b) please, thank you!
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