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    Determining market entrance

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    Suppose the market demand and supply functions are QD = 430 - 5P and QS = 2P + 318. You have just graduated and moved to this city; as a new MBA and an entrepreneur, you are considering entering the market for this product.

    a. Determine the equilibrium price and quantity in this market.
    b. You've researched and found that most firms in the market currently experience costs such that TC = 50 + 16Q - 2Q2 + 0.2Q3. Determine whether or not you should enter this market. Use graphs to support your answer.
    c. Due to unforeseen delays, you don't enter the market. However, a year later the market supply has changed to QS = 2P + 290. Are you surprised at this shift in supply?
    d. Given the new supply conditions, determine whether or not you should enter the market.

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    https://brainmass.com/economics/general-equilibrium/determining-market-entrance-509615

    Solution Preview

    See the attached file. Thanks.

    Suppose the market demand and supply functions are QD = 430 - 5P and QS = 2P + 318. You have just graduated and moved to this city; as a new MBA and an entrepreneur, you are considering entering the market for this product.

    a. Determine the equilibrium price and quantity in this market.
    P QD QS
    0 430 318
    5 405 328
    10 380 338
    15 355 348
    16 350 350
    20 330 358
    25 305 368
    30 280 378
    35 255 388
    40 230 398
    Looking at the Graph
    Equilibrium Quantity 350
    Equilibrium price 16

    Solving algebraically: AT equilibrium, QS=QD
    430-5P = 2P+318
    5P+2P=430-318
    P= 16
    Q= 350

    b. You've researched and found that most firms in the market ...

    Solution Summary

    The solution finds the equilibrium price and quantity for two different market supply options.

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