2350pqset0003 - York University ECON2350 V Bardis Practice...

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York University - ECON2350 - V. Bardis Practice Set 3 1. Using the concepts of consumer and producer surplus argue that the equilibrium in a perfectly competitive market is efficient. 2. Provide a set of assumptions that describes a perfectly competitive market and state the short- run and long-run equilibrium conditions. 3. The short-run cost function of the representative firm in a competitive industry is given by SRC ( q, K ) = 1 /K + Kq 2 where K denotes a fixed input and q is the level of output produced by the firm. Industry demand is given by Q=2,200-23p. Find the equilibrium price and quantity in this market in the long-run. 4. Consider the case of a perfectly competitive industry with n identical firms. Each firm’s total cost function is given by C ( q ) = 100 + 10 q + q 2 The demand for the good is given by Q d = 400 - 4 p (a) Find the equilibrium in the short run if the number of firms is 10. (b) Calculate consumer and producer surplus in the short-run equilibrium. What is the total surplus in the market?
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