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Unformatted text preview: ECON 251 Maymester 2009, based on Exam from Fall 2008 Essay Question Practice Essay 2 1. Consider a perfectly competitive market with the demand curve given by 1001 10 d P Q =- and supply is given by 990 s Q P = + . Firms in the market have the following cost schedule: Quantity Total Cost ($) Marginal Cost 9- 1 14 5 2 18 4 3 23 5 4 30 7 5 40 10 6 55 15 7 77 22 Please answer the following parts : a. What are the market equilibrium quantity and price? You do not need to graph the market. (1.5 points) b. What price does a single perfectly competitive firm face, what is the profit maximizing quantity, and what is the profit for the firm given the profit maximizing price and quantity? Please graph the price, profit maximizing choice, and the profit for a single perfectly competitive firm. (3 points) c. How many perfectly competitive firms are in this market? (0.5 points) d. Given the information above, what long-run adjustment will be made in the market? Show graphically how market supply, market prices, and individual firm profit will change in the long...
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This note was uploaded on 02/06/2012 for the course ECON 251 taught by Professor Blanchard during the Summer '08 term at Purdue.
- Summer '08