ECO100Y5 Lecture Notes - Lecture 8: Marginal Cost

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ECO100Y5 Full Course Notes
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ECO100Y5 Full Course Notes
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R = . 25, w = 1, f = 4. Tan: k = 4l^2 = q^4(l=1/2q^2) =: q^2+4 = ac: q+4/2 = mc = 2q. Mes: pie = 0, p = ac, n: if p = 4, d = 80-10p, q = 40, n=40/2= 20, s = 20x1/2p, s = 10p. Pie > o therefore number of entries(n) would go up. Increase in n means p(price) goes down until pie is 0, p2 = 4, q2=2. Therefore competitive industry would mean industry is in good use. Happens because there is scarcity in input markets. N increases, w increases, ac increases, mc increases. N increases, ac and mc will remain constant. Costs move in the opposite directions of ici. The greater the number of firms, the higher the cost. C = q^2-nq+16: do = 24-2p, d1=28-2p: ac=mc, mc= 2q=n, ac = q-n+16/q. Marginal cost is 2q n, but we just found out q is 4, so marginal cost is 8-m.

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