Question

Suppose you are asked to analyze a competitive market with identical firms for the government. You estimate the following: Inverse market demand is: p= 100 -0.01Q, The long-run market supply is: p = 20 Each firm's total cost function is: C(q) = 500 +0.2002 What is the marginal cost faced by each firm? MC=0 Assuming the industry is in long-run equilibrium, how many firms are currently in this market? (enter your answer rounded to the nearest whole number). Now suppose the government is thinking of restricting the number of firms to only seven. At what quantity will the long-run inverse market supply curve go from being horizontal to upward sloping? (Enter your answer as a The long-run inverse market supply curve will become upward sloping at a quantity of whole number.)

Answer 1

€ (1) 5eut 0.209² Differenhate ((1) wirit g to find Mc.. Me=de(a) 04 Mo- (0.20 (2) 9 1 Mc = 0.409. Plug long enn egalabrium set lung sun murkst supply Market demand for. 20 : Jou - Dolce 0.010-10-20 - ce= (30/0.01) 10 = 30o Clong run eguil, num guanchay) ی آنا - ما -2 P = 10-v.ul(Bou) i = 10-30 IP = 20 Clongan eguilibrin A perfectly competitive from ponduces at P - MG → 20 20.489 priced 12/2v|940) 19=50 t an in die doel from will produce eguil, toim. 9-50 in the long

DELIA PE No Number of firm (n)= Markent county. in divident from grunking Buwa 1 - Boo 50 In = 160 There are Suncatly 160 fim in this moket AC = ((4) ſa Ac - (50 + 0.2094) / 4 tac se + 0,30% Ac Acid minimum and after that At MC= breeding Ac start Set Mc= AC 0.40g = so + 209 (0.404 -0.004) - Supo 0.209 = 5 cm g² = (sw/0.20) 9= 2500 » - 49 50 9-2250 The minimum of Ac is attain at a 50, after that Ac stards receding, Mc will also start siling with AC TT

Induda) from Supply cone became quod sloping after 9 = 50. There are 7 firms. 8. u=779 0.7 (50) a = 350 The long aun market Supply wore became upward sloping after ce = 350.