ere are 80 firms of type A and 60 firms of type B in a perfectly competitive market. On one hand, type A firm faces a fixed cost (all sunk) of $12 and average variable cost is 2q. On the other hand type B firm faces a fixed cost (all sunk) of $8 and the variable cost is 3q. Market demand function is given by Q=1200-70P. Find the equilibrium quantity of a type B firm and its profit, respectively.

ere are 80 firms of type A and 60 firms of type B in a perfectly competitive market. On one hand, type A firm faces a fixed cost (all sunk) of $12 and average variable cost is 2q. On the other hand type B firm faces a fixed cost (all sunk) of $8 and the variable cost is 3q. Market demand function is given by Q=1200-70P. Find the equilibrium quantity of a type B firm and its profit, respectively.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.9P

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