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What is the socially optimal number of firms

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In a monopolistically competitive industry, total profits are a function of the number of firms n as follows: ( ) = 10 - 0.1 ^(2)

Furthermore, consumer surplus is a function of n : ( ) = ^(3/2)

i) In the long-run equilibrium how many firms will exist in this industry?

ii) What is the socially optimal number of firms in this industry?

iii) Does the long-run equilibrium exhibit insufficient or excessive production?

Reference no: EM132548454

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