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Question: There are 40 identical firms in a perfectly competitive market. Each competitive firm has a cost function T C(q) = 32 + 2q 2 . The market demand is given by QD = 200 - 10p.
(a) Derive each competitive firm's short run supply function (the firm's optimal output q as a function of the market price p).
(b) What is the market supply function?
(c) What are the equilibrium price and quantity in the market? (d) (3 points) Determine whether or not each firm should operate in the long-run.
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Suppose the production function of a price-taking firm is given by q=f(x) where f(0)=0, and f '(x)>0 and and f ''(x)0. The price of output is p and the price of the input is w. Instead of maximizing profit, the firm maximizes revenue subject to th..
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