Assume a competitive market in which each firm with has a cost function of: 0.2q3 -7.9q2 +181q. Q1: If the current market price is $87 per unit, how many units will this firm provide to the market? Q2: What are the short-run profits of this firm? Q3: What is the long-run market price, and how many units will each firm provide to the market? Q4: IF the demand func. for this market is P(Q)=1169.49-2Q, how many firms will run in this market in the long-run?
Assume a competitive market in which each firm with has a cost function of: 0.2q3 -7.9q2 +181q. Q1: If the current market price is $87 per unit, how many units will this firm provide to the market? Q2: What are the short-run profits of this firm? Q3: What is the long-run market price, and how many units will each firm provide to the market? Q4: IF the demand func. for this market is P(Q)=1169.49-2Q, how many firms will run in this market in the long-run?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Assume a competitive market in which each firm with has a cost function of: 0.2q3 -7.9q2 +181q.
Q1: If the current market
Q2: What are the short-run profits of this firm?
Q3: What is the long-run market price, and how many units will each firm provide to the market?
Q4: IF the
Expert Solution
Introduction
We are going to find the equilibrium quantity when markets are competitive, that is Price equals to Marginal Cost and then Long run equilibrium price is equal to minimum of Average total cost
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