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    Economics: Dead Weight Loss

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    https://brainmass.com/economics/general-equilibrium/economics-dead-weight-loss-309285

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    Dear student
    Solution is attached

    TC=50-5q+q^2
    Average cost=TC/q=(50-5q+q^2)/q=(50/q)-5+q
    Firm's fixed costs can be calculated by putting Q=0
    TFC=50-5*0+0^2=50
    Average fixed costs, AFC=TFC/q=50/q
    Total Variable Cost (TVC) is given by
    TVC=TC-TFC=-5q+q^2
    Average variable cost (AVC) is given by
    AVC=TVC/q=(-5q+q^2)/q=-5+q

    For equilibrium price, put Qd=Qs
    5000-600P=1000+200P
    800P=4000
    P=4000/800=5
    Qd=1000+200*5=2000
    Qs=5000-600*5=2000
    Market equilibrium price =$5
    Each firm is a price taker in perfectly competitive environment. It will select its output such that MR=MC=P to maximize its profits.
    2q-5=5
    2q=10
    q=10/2=5
    Each typical potato firm will produce 5 units and sell at a price of $5 per unit.

    Total Revenue at optimal ...

    Solution Summary

    Dead weight loss is determined.

    $2.19