Suppose that firms in the US auto industry are symmetric and compete based onmonopolistic competition. The US economy demands in total 16 million cars, witheach firm facing the following demand functionq = 16, 000, 000 :- 36.000 (Pwhere 16,000,000 denotes total demand for autos by US consumers, n is the totalnumber of firms competing in the auto industry and p is the average price charged bythese firms. Each firm also operates based the following total cost functionTC = 640, 000, 000 + 15, 000qAnswer the following questions:1. The number of firms, n, is equal to2. The price, p , charged by each firm is equal to3. Suppose the US opens up to trade with an economy that is 3-times larger (i.e.,purchases 48 million autos).1. the number of fırms after opening up to trade is2. the price charged by each firm after opening up to trade is3. Do US consumers gain from trade?

Given : Demand=16 million cars Demand function : q=16,000,000[1n-136000(P-P')] TC=640,000,000+15000q…

Suppose that firms in the US auto industry are symmetric and compete based on monopolistic competition. The US economy demands in total 16 million cars, with each firm facing the following demand function q = 16, 000, 000 . - 3 00 (P – P) where 16,000,000 denotes total demand for autos by US consumers, n is the total number of firms competing in the auto industry and p is the average price charged by these fırms. Each fırm also operates based the following total cost function TC = 640, 000, 000 + 15, 000q Answer the following questions: 1. The number of firms, n, is equal to 2. The price, p , charged by each firm is equal to 3. Suppose the US opens up to trade with an economy that is 3-times larger (i.e., purchases 48 million autos). 1. the number of firms after opening up to trade is 2. the price charged by each firm after opening up to trade is 3. Do US consumers gain from trade?

Suppose that firms in the US auto industry are symmetric and compete based on monopolistic competition. The US economy demands in total 16 million cars, with each firm facing the following demand function q = 16, 000, 000 . - 3 00 (P – P) where 16,000,000 denotes total demand for autos by US consumers, n is the total number of firms competing in the auto industry and p is the average price charged by these fırms. Each fırm also operates based the following total cost function TC = 640, 000, 000 + 15, 000q Answer the following questions: 1. The number of firms, n, is equal to 2. The price, p , charged by each firm is equal to 3. Suppose the US opens up to trade with an economy that is 3-times larger (i.e., purchases 48 million autos). 1. the number of firms after opening up to trade is 2. the price charged by each firm after opening up to trade is 3. Do US consumers gain from trade?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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