Assume that the market for Coca-Cola in your area is perfectly competitive, with Demand P =...

Assume that the market for Coca-Cola in your area is perfectly competitive, with Demand P = 9 ? 0.3Q D and Supply P = 2 + 0.1Q S . Each firm that sells Coca-Cola is identical, with Total Cost T C = 3 + Q 2 , which gives Marginal Cost MC = 2Q.

1 Find the equilibrium price and quantity and graph the market.

2 Identify the consumer and producer surplus on the graph.

3 Graph the firm. Include the marginal revenue, marginal cost, and average total cost curves.

4 How much does each firm produce?

5 How much profit does each firm earn?

6 Identify the profit on the graph.

7 What is the shutdown price for the firm?

8 What is the long-run equilibrium price for the market?

Expert Solution

Rahul Sunny answered 2 years ago

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