More exercises on Competitive Mrkts (1)

More exercises on Competitive Mrkts (1) - More Exercises on...

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More Exercises on Competitive Markets Problem 1. In a perfectly competitive market there are 20 identical firms whose total and marginal short run cost curves (in dollars) are: STC(q)=20+15q+0.05 q 2 SMC(q)= 15+0.1 q a. Assume all fixed costs are nonsunk. What is the short run market supply? b. What is the produced output per firm if each firm earns zero economic profit? c. What is the market price for which all firms earn zero economic profit? Problem 2. In the market there is a group of identical firms producing widgets. All fixed costs are nonsunk. Assume that the market supply is S(P)=0 if P<20 and S(P)=10P-100 if P≥20. a. What is the shut down price for the individual firm? b. What is the economic profit of each individual firm if the market price is 20? Consider the same market in the long run. Assume the prices of all inputs are constant. c. What is the long run equilibrium price? d. If the market demand is D(P)= 10000-200P, what is the long run quantity demanded? e.
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More exercises on Competitive Mrkts (1) - More Exercises on...

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