A market has N=28 firms each with identical costs C(q)=1q2+40. Demand is QD=800-4p. What will be...

A market has N=28 firms each with identical costs C(q)=1q²+40. Demand is Q_D=800-4p.

What will be the short-run equilibrium price?

Round to the nearest cent (0.01)

Solutions

Expert Solution

The number of forms in the industry is 28, the record, it is a case of perfect competition. The forms will maximize profit at the point where MC is equal to Price.

C = q^2 + 40

Differentiating C wrt q, we get

MC = 2q

Given, demand cure, Q =.800 - 4P

The demand of whole industry would be equal to 28q.

Price, P = 2q = 2 × 22.22 = $ 44.44

Rahul Sunny answered 1 year ago

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