What will be the total output of the industry and the price

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Reference no: EM133364995

Questions: Assume the model of monopolistic competition and economies of scale. Marginal costs are equal to $10 and fixed costs are equal to $500.

a. A firm in the industry is producing 20 and selling its output for $40. Will firms be entering or exiting the industry? Why?

b.Assume that in equilibrium before trade, there are 20 firms, each firm producing 20 units What will be the total output of the industry and the price of output?

c. Assume that in the after trade equilibrium, there are 14 firms, each producing 50 units. What will be the total output of the industry and the price of output?

Reference no: EM133364995

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