Unformatted text preview: b. Compute the consumer surplus and producer surplus in this market. The sort run total and marginal cost functions for one individual firm (restaurant) are given by the following equations (assume all firms are identical in terms of their technologies, and therefore their cost functions): (q is the number of hamburgers per day produced by one restaurant) TC = (1/4)*q 2 + 25 MC = q /2 c. Find the quantity produced by each firm. How many firms are there in the market? d. Find the economic profits. Is the observed price sustainable in the long run? e. What happens to this market in the long run? Will there be entry or exit of firms in this market? Explain f. What is the long run price and quantity in this market? What is the long run quantity produced by each firm in this market? 3. Question 5, page 296 in the book. 4. Question 13, page 296 in the book. 5. Question 2, page 333 in the book....
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This note was uploaded on 04/01/2008 for the course ACCT 100 taught by Professor Punke during the Fall '08 term at University of Wisconsin.
- Fall '08