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equilibrium market price and quantity

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Profit Maximization and Producer Surplus.

Please show all your work.

1) Consider a competitive market in which the market demand curve for microwave ovens is expressed as:

P = 1000 - 5Q

And the supply of microwave ovens is expressed as:

P = 100 + Q

Where P is the price per unit and Q is the total number of microwave ovens produced per day by all firms in the market. The typical firm in this market has a marginal cost of: MC = 10 + 24q

Where q is the number of microwave ovens produced per day by an individual firm.

a) Determine the equilibrium market price and quantity.
b) At the equilibrium price computed in (a) above, what is the quantity produced by a typical firm?
c) At the equilibrium price computed in (a) above, what is the produced surplus of a typical firm? Hint: note that the firm's supply curve is conveniently linear.
d) If all firms in the market have the same cost structure, how many firms would compete at the equilibrium price computed in (a) above?

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1) Consider a competitive market in which the market demand curve for microwave ovens is expressed as: P = 1000 - 5Q
And the supply of microwave ovens is expressed as:
P = 100 + Q
Where P is the price per unit and Q is the total number of microwave ovens produced per day by all firms in the market. The typical firm in this market has a marginal ...

Solution Summary

Determine the equilibrium market price and quantity.

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Managerial Economics

Fifteen competitive gadget makers each have the following cost structure:
Ci = 0.1qi2 + 2qi + 160 i = 1,2,3.....15
(a) Determine the average fixed, average variable, average total and marginal cost functions.
(b) What is the short-run supply curve for each firm?
(c) What is the market supply curve?
(d) If market demand is q = 850 - 25p show that the equilibrium market price and quantity is both a long and short run equilibrium.
(e) If market demand shifts down to q = 650 - 25p what will be the short run market equilibrium price and quantity?
(f) What will market price and quantity be in the long run under the lower demand as in (e) above?

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