3. Partial equilibrium You suffered through 1 and 2 (and later, 4), so I'm just going to give you the market demand curve and the cost function for the representative seller, respectively. 16 Р q² C,(q) = & -+ + A₂ Where i denotes an individual firm. For now, we'll assume A, is a constant; later, it'll depend on the firm. There are N firms. a. Construct market supply. b. What is the market equilibrium price and quantity for some N? e. Find the long-run N given a constant A,.
3. Partial equilibrium You suffered through 1 and 2 (and later, 4), so I'm just going to give you the market demand curve and the cost function for the representative seller, respectively. 16 Р q² C,(q) = & -+ + A₂ Where i denotes an individual firm. For now, we'll assume A, is a constant; later, it'll depend on the firm. There are N firms. a. Construct market supply. b. What is the market equilibrium price and quantity for some N? e. Find the long-run N given a constant A,.
Chapter1: Making Economics Decisions
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Transcribed Image Text:3. Partial equilibrium
You suffered through 1 and 2 (and later, 4), so I'm just going to give you the market
demand curve and the cost function for the representative seller, respectively.
QD
16
Р
q²
C₂(q) + A₂
Where i denotes an individual firm. For now, we'll assume A, is a constant; later, it'll
depend on the firm. There are N firms.
a. Construct market supply.
b. What is the market equilibrium price and quantity for some N?
c. Find the long-run N given a constant A,.
Now suppose A, differs for each firm. For simplicity, we number the firms 1 to M. Firm 1
has fixed cost A₁ = 0.005, firm 2 has fixed cost A₂ = 0.01, firm n has a fixed cost A₁ =
0.005n, and so on.
d. For some N, what is the break-even A₂?
c. How many firms will there be in equilibrium?
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Please solve part d and part e. Thank you!
Transcribed Image Text:3. Partial equilibrium
You suffered through 1 and 2 (and later, 4), so I'm just going to give you the market
demand curve and the cost function for the representative seller, respectively.
QD
16
Р
q²
C₂(q) + A₂
Where i denotes an individual firm. For now, we'll assume A, is a constant; later, it'll
depend on the firm. There are N firms.
a. Construct market supply.
b. What is the market equilibrium price and quantity for some N?
c. Find the long-run N given a constant A,.
Now suppose A, differs for each firm. For simplicity, we number the firms 1 to M. Firm 1
has fixed cost A₁ =0.005, firm 2 has fixed cost A₂ = 0.01, firm n has a fixed cost A, =
0.005n, and so on.
d. For some N, what is the break-even A₂?
c. How many firms will there be in equilibrium?
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