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In the city of Gelato the market for ice cream is perfectly competitive. Aggregate demand for ice cream is:
where p is the price for one cone of ice cream. All ice cream producers in the city have the similar total cost function:
where Qi represents the number of ice cream cones firm i makes. Suppose that the market is in equilibrium.
a) Derive the firms' marginal and average cost.
b) Compute price and quantity in equilibrium.
Strategic Reasons For political or strategic reasons, a country may not wish to be dependent upon imports and so may protect a home industry even if it is inefficient. Many co
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In the city of Gelato the market for ice cream is perfectly competitive. Aggregate demand for ice cream is: where p is the price for one cone of ice cream. All ice cream pr
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