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Unformatted text preview: 2 At what level of output is average cost at its lowest? Also draw a graph showing firm average cost and marginal cost curves. 4. Consider a shortrun perfectly competitive equilibrium with 2 identical firms, each with the above cost function. What is the equation for the industry supply curve? 5. The industry demand curve is estimated to be Q = 100 p If there are two firms operating in the market, what is the equation for the residual demand curve for each firm? 6. Solve for the shortrun perfectly competitive equilibrium levels of price and output in which there are two firms. 7. What are profits of each firm in this shortrun equilibrium? 8. How many firms will compete in the longrun perfectly equilibrium (remember, don't worry if the answer is not a natural number, fractions of firms are ok for our purposes)?...
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This note was uploaded on 09/11/2008 for the course ECON 418 taught by Professor Breman during the Spring '08 term at University of Arizona Tucson.
 Spring '08
 BREMAN
 Econometrics

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