Find the long-run equilibrium in this market

Assignment Help Business Economics

Reference no: EM131112505

Suppose there are 100 firms in a perfectly competitive industry. Each firm has a U-shaped, long-run average cost curve that reaches a minimum of $10 at an output level of 8 units. Marginal costs are given by and market demand is given by MC(q) = q + 2 Q = 1000 − 20P a. Find the long-run equilibrium in this market and determine the consumer and producer surplus (in this case, the areas of the triangles). b. Suppose instead there was a single supplier whose marginal cost curve is MC(Q)= 1/100Q+2 i) From the above expression for market demand, determine the monopolist’s average revenue curve. ii) From part (i),find the monopolist’s total revenue curve. iii) Differentiate the expression in part (ii) to obtain the monopolist/s marginal revenue curve. iv) From part (iii), what is the monopolist’s optimal supply? v) Explain why this outcome is inefficient in comparison to the competitive outcome. I only need the consumer and producer surplus in part a, and iv in part b.

Reference no: EM131112505

Questions Cloud

Wages rise before all food stamps are eliminated : A welfare recipient can receive food stamps as well as cash welfare benefits. If the food stamp allotment is set as follows, How high can wages rise before all food stamps are eliminated? If the welfare formula in Problem 1 applies, what is the combi..

Make sense for an individual earning : lease answer the following question in your own words (between 100-150 words).Why wouldn't it make sense for an individual earning $500/ hour and working 10 hours a day to spend 3 hours (taken from the 10 hours) to shovel snow from their driveway? FY..

Cournot oligopoly outcome and monopoly outcome in terms : What are differences between Cournot oligopoly outcome and monopoly outcome in terms of the equilibrium price and quantity? Explain why it is difficult to maintain a Cartel agreement (other than it is illegal). Explain the key differences between Cou..

Describe the free-rider problem : Your economics professor assigns a group project for the course. Describe the free-rider problem that can lead to a suboptimal outcome for your group. To combat this problem, the instructor asks you to evaluate the contribution of your peers in a con..

Find the long-run equilibrium in this market : Suppose there are 100 firms in a perfectly competitive industry. Each firm has a U-shaped, long-run average cost curve that reaches a minimum of $10 at an output level of 8 units. Marginal costs are given by and market demand is given by MC(q) = q + ..

What are the national health expenditure analysis trends : What are the National Health Expenditure Analysis trends from 1970 -2003 for Healthcare? What is the magnitude and direction of cost changes within and across each of these categories?

Consumption expenditure-statistical discrepancy : Using this information in the table above, what does GDP equal? Items Billion of dollars Wages 300 Consumption expenditure 350 Interest, rent, and profit 50 Statistical discrepancy 0 Government expenditure 300 Indirect taxes minus subsidies 15 Net ex..

Key difference in assumptions between the matrices : Fan duel and draft king (daily fantasy sports leagues) have engaged in extensive advertising over the last few months. Construct two payoff matrices showing the payoffs to the firms for two different (medium and high) levels of advertising. use one p..

Monopolist can maintain the separation between two markets : Suppose a textbook monopoly can produce any level of output it wishes at a constant MC and AC of $5 per book. Assume that the monopoly sells its books in two different markets that are separated by some distance. The demand curve in the first market ..

User Account

All Pages