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28 Sep 2019
7. Consider a monopolistically competitive market with N firms. Each firms' business opportunities are described by the following equations:
Demand:Q = 100/N - P
Marginal Revenue = 100/N -2Q
Total Cost= 50+ Q2
Marginal Cost= 2Q
a. How does N, the number of firms in the market, affect each firm's demand curve? Why?
b. How many units does each firm produce? (The answer to this and the next two questions depends on N.)
c. What price does each firm charge?
d. How much profit does each firm make?
e. In the long-run, how many firms will exist in this market?
7. Consider a monopolistically competitive market with N firms. Each firms' business opportunities are described by the following equations:
Demand:Q = 100/N - P
Marginal Revenue = 100/N -2Q
Total Cost= 50+ Q2
Marginal Cost= 2Q
a. How does N, the number of firms in the market, affect each firm's demand curve? Why?
b. How many units does each firm produce? (The answer to this and the next two questions depends on N.)
c. What price does each firm charge?
d. How much profit does each firm make?
e. In the long-run, how many firms will exist in this market?
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Joshua StredderLv10
28 Sep 2019