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Q1. Assume a monopolistic competitor in long-run equilibrium has a constant marginal cost of $6 also faces the Demand curve given in the following table:Q 20 18 16 14 12 10 8 6P $ 2 4 6 8 10 12 14 16
a. Illustrate what output will the firm choose?
b. Illustrate what will be the monopolistic competitor's average fixed cost at the output it chooses?
Q2. a competitive industry is comprised of 15 identical firms, each with a short-run total cost function of c(q)=722+q(squared)/200. Market Demand is 7000-250p=Q(p). Find the competitive equilibrium is?
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Indicate whether this production function exhibits constant, increasing, or decreasing returns to scale.
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