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IO_Homework_1 - Econ E385 Industrial Organization, Spring...

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Econ E385 Industrial Organization, Spring 2017Problem Set #1Duein classThursday, Jan 26Problem 1.Suppose that, in a large city, 200 identical street vendors compete in acompetitive market for hot dogs.1. Each vendor’s total costs to produceqhot dogs is,C(q) =14q+18q2.What isthe marginal cost function of each firm?2. Using your answer from part 1, what is the supply curve for one individual firm?3. Given your answer from above, how many hot dogs will each vendor produce ifoffered a price of $4 per hot dog?4. What is the aggregate supply curve for the market?5. Let demand for hot dogs beQ= 2500-100P, what is the short run equilibriumprice?6. What is the total quantity of hot dogs sold in equilibrium?7. In the long run, would you expect this industry to experience entry or exit?Explain your answer.

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Term
Summer
Professor
NoProfessor
Tags
Economics, long run equilibrium, hot dogs, Econ E385 Industrial Organization, Monolith Enterprises

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