Consider a competitive market in which the market demand for the product is expressed asP = 75 ‑ 1.5Q,and the supply of the product is expressed asP = 25 + 0.50Q.Price, P, is in dollars per unit sold, and Q represents rate of production and sales in hundreds of units per day. The typical firm in this market has a marginal cost ofMC = 2.5 + 10q.Determine the equilibrium market price and rate of sales (output). Show your working. Determine the rate of sales (output) of the typical firm, given your answer to part (i) above. If the market demand were to increase to P = 100 ‑ 1.5Q, what would the new price and rate of sales in the market be? What would the new rate of sales (output) for the typical firm be?. Show your workingIf the original supply and demand represented a long‑run equilibrium condition in the market, would the new equilibrium (iii) represent a new long‑run equilibrium for the typical firm? Explain

Perfect competition is one of the types of market structure where there are many sellers and many…

Answered: Consider a competitive market in which…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider a competitive market in which the market demand for the product is expressed as

P = 75 ‑ 1.5Q,

and the supply of the product is expressed as

P = 25 + 0.50Q.

Price, P, is in dollars per unit sold, and Q represents rate of production and sales in hundreds of units per day. The typical firm in this market has a marginal cost of

MC = 2.5 + 10q.

Determine the equilibrium market price and rate of sales (output). Show your working.
Determine the rate of sales (output) of the typical firm, given your answer to part (i) above.
If the market demand were to increase to P = 100 ‑ 1.5Q, what would the new price and rate of sales in the market be? What would the new rate of sales (output) for the typical firm be?. Show your working
If the original supply and demand represented a long‑run equilibrium condition in the market, would the new equilibrium (iii) represent a new long‑run equilibrium for the typical firm? Explain

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