Compute consumer and producer surplus

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Reference no: EM13686401

1) Consider a perfectly competitive market with (inverse) demand of P = 90 - 3Q and supply of P = 10 + Q.

a) Decide the equilibrium price and quantity.

b) Compute consumer and producer surplus.

c) Draw a diagram that depicts the market and identify the equilibrium.

2) Presume a firm that has total costs of T C = 2q^2 +18 can sell its good at price p = 12.

a) What is the marginal cost, MC? What is the average cost, AC?

b) How much will the firm produce and what are the profits at this output level?

Reference no: EM13686401

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