Define social welfare as sum of consumers and producers

Reference no: EM13245029

There are H consumers and n firms. The demand of each consumer is
x(p) = 1 - p and the cost function of each firm is c(y) = (y)^2/2.

1. Compute the competitive equilibrium price, quantity and the consumers' and producers' surplus as functions of H and n.

2. Define social welfare as the sum of consumers' and producers' surplus and establish a relation between social welfare and H and n. What happens when H = 10 and n tends to infinite?

Reference no: EM13245029

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