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Unformatted text preview: q where AC/q =-F/q 2-b + 2 q = 0 . (c) At what output levels does the MC curve cross the AC and the AVC curves? i. MC crosses AC at q such that-F/q-bq-2 q 2 = 0 . ii. MC crosses AVC when q = b 2 or, trivially, when q = 0 . (d) Use calculus to show that the MC curve must cross the AVC at its minimum point. 1 i. In the current problem, we can conrm this result by observing that AV C q =-b + 2 q = 0 only when q = b 2 . 3. Each rm in a competitive market has a cost function of C = 16 + q 2 . The market demand function is Q = 24-p . Determine the long-run equilibrium price, quantity per rm, market quantity, and number of rms. (a) p * LR = 8 (b) q * LR = 4 (c) Q * LR = 16 (d) N * LR = 4 2...
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This note was uploaded on 10/03/2011 for the course ECON W3211 taught by Professor Elmes during the Fall '09 term at Columbia.
- Fall '09