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    firms in compeitive markets

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    Suppose a firm in a perfectly competitive industry has the short run cost function tc=100 + q2 with the corresponding marginal cost curve of mc=2q
    1)if the market price is $30 what is the profit maximizing output level for each firm? What is the profit of the firm?
    2) what would be the competitive equilibrium price in this industry?

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    Solution Preview

    For perfect competition, the profit max. rule is p=mc

    1) p = 30 = 2q = MC, ...

    Solution Summary

    The firms in competitive markets are examined. The competitive equilibrium price in the industry are given.