Determining the Effect of Taxes on a MarketSuppose all firms in a constant cost industry have identical costs of C(q)=5q²+6q+20. The marketdemand is Qo=256 – 2p.(a) Find the long-run equilibrium: Q*, q*, p*, and N*.(b) Suppose the government restricts the market to 41 firms. To do so, firms are required to get ipermit to operate, but only 41 permits are issued in total. Find the equilibrium price andquantity.(c) Suppose instead of permits, the government simply charges all firms a fixed fee to operate ofF=60. What is the resulting equilibrium price, quantity, and number of firms?

The perfect competition markets are identified by multiple buyers and sellers. All the firms present…

Determining the Effect of Taxes on a Market Suppose all firms in a constant cost industry have identical costs of C(q)=5q²+6q+20. The market demand is Qo=256-2p. (a) Find the long-run equilibrium: Q*, q*, p*, and N*. (b) Suppose the government restricts the market to 41 firms. To do so, firms are required to get : permit to operate, but only 41 permits are issued in total. Find the equilibrium price and quantity. (c) Suppose instead of permits, the government simply charges all firms a fixed fee to operate of F=60. What is the resulting equilibrium price, quantity, and number of firms?

Determining the Effect of Taxes on a Market Suppose all firms in a constant cost industry have identical costs of C(q)=5q²+6q+20. The market demand is Qo=256-2p. (a) Find the long-run equilibrium: Q, q, p, and N. (b) Suppose the government restricts the market to 41 firms. To do so, firms are required to get : permit to operate, but only 41 permits are issued in total. Find the equilibrium price and quantity. (c) Suppose instead of permits, the government simply charges all firms a fixed fee to operate of F=60. What is the resulting equilibrium price, quantity, and number of firms?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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