UCLA
Economics 11
–
Fall 2009
Professor Mazzocco
Problem Set 9
Because of the final this problem set will not be graded and you do not have to turn it in.
However, solving the following exercises is an excellent practice for the final.
1) Suppose there are 200 identical firms in a perfect competitive industry. Moreover, assume that each
firm has the following short run cost function: C(q) = 0.5q
2
+ 5q + 20.
a) Compute the shortrun supply curve for a single firm, expressing q as a function the price P.
b) Calculate the shortrun industry supply curve.
c) Now assume that the market demand is given by Q
D
= 1000
–
50P. Compute the shortrun equilibrium
price and its corresponding quantity.
2) Assume that there are two types of consumers. In particular, consumers of type 1 has utility function
u(x, y) = x
0.5
y
0.5
, whereas consumer of type 2 has u(x, y) = x
0.3
y
0.7
. Both of them have income given by
I>0, and the prices denoted are by P
X
and P
Y
, as usual.
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 Fall '07
 McDevitt
 Economics, Supply And Demand, producer, $10, corresponding quantity

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