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Unformatted text preview: How do you interpret these results? (3) Suppose that all the firms in a perfectly competitive industry have the following identical cost function: C = Q 3- Q 2 + Q. Show that their marginal cost function is given by MC = 3Q 2 – 2Q +1. (i) Express algebraically the average cost function for each firm. (ii) Find the long-run supply curve of this industry. (iii) Suppose that the market demand for the product of this industry is given by Q = -4P + 103. At equilibrium, how many firms will operate in this industry? (4) Pindyck, Rubinfeld and Koh, p. 385, #14. (5) Pindyck, Rubinfeld and Koh, p. 385, #15....
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- Spring '08