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mid2 question

# mid2 question - Additional practice for midterm 2 Problem 1...

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Additional practice for midterm 2 (11/13/08) Problem 1 Assume there are 7 identical firms each with short-run cost functions equal to: C = 10 + 2 q + q 2 a. How much q does a single firm supply as a function of price? answer: q single firm = 1 2 P ! 1 if P " 2 0 if P < 2 # \$ % & % b. What is the market supply curve (total quantity supplied as a function of price)? answer: Q market = 7 2 P ! 7 if P " 2 0 if P < 2 # \$ % & % c. Suppose the government starts collecting a \$2 tax for each unit of output. What is the new market supply curve (total quantity supplied as a function of price)? answer: Q market = 7 2 P ! 14 if P " 4 0 if P < 4 # \$ % & %

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S world P Q S local D local 10 3 6 10 4 2 7 Problem 2 (solutions at review session Monday)
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mid2 question - Additional practice for midterm 2 Problem 1...

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