PERFECT COMPETITION
Short Run
1.
The short run cost function of the typical firm of one industry is C = 0,5 q
2
 10 q + 200.
a)
Find the shortrun supply function for this firm
b)
Find the shortrun supply function for the industry if there were 50 identical firms in that
industry.
c)
If the market demand function is Q =
1500  50 P, find the shortrun equilibrium of the firm
and the industry. Compute total profits of the industry,
d)
If the market demand function becomes Q = 2000  50 P, find the new equilibrium and the
profits earned by each firm.
e)
Calculate the consumer surplus in both cases.
2.
There are 10 identical firms in a competitive industry. The shortrun cost function of each of them
is C = 250 12q + 2q
2
.
a)
Calculate the shortrun supply firm of the firm and the industry
b
) The market demand function for that good is P= 160Q, where Q is total industry output.
Calculate the shortrun equilibrium price and quantity in this market
3.
There are 100 identical firms in an industry, each of them having the following shortrun total cost
function: C = 36 + 8q + q
2
.
a)
Calculate the shortrun supply firm of the firm and the industry.
b)
The market demand function is P = 32  Q/50, where Q is total industry output. Find the
market equilibrium price and quantity. How much will each firm produce?
4.
In a competitive market, demand is given by Q = 500  50 P. There are two groups of firms in that
market: the firm has 100 firms with a cost structure given by C
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 Spring '10
 mcin
 Econometrics, Perfect Competition

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