ECO 4371 — Theory of Industrial Structure Solution to Workbook 2. Competition
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ECO 4371 — Theory ofIndustrial Structure
Solution to Workbook 2. Competition
1.
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1.1 |
AVC |
AVC= 40 – 2q + q2 |
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SMC |
SMC= 40 – 4q + 3 q2 |
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1.2 |
Shutdown price |
$39 |
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1.3 |
Supply function |
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1.4
Cost Structure 1.
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Market price (p) |
Output (q) |
Total Cost |
Total Revenue |
Profit |
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$ 30 |
0 |
60 |
0 |
-60 |
|
$ 45 |
2.12 |
145.32 |
95.38 |
-49.94 |
|
$ 50 |
2.61 |
168.57 |
130.52 |
-38.06 |
|
$ 100 |
5.19 |
353.35 |
518.82 |
165.47 |
1.5 Setting p = ATC, and then solving for q = 8.8730.
q = = 8.8730
2.1 p = $100
2.2 p = $100, Q0 = 2500, q = 10, (the number of firms) n0 = 250, (profit) π = 0. 2.3Setting ATC = SMC, q = 10
2.4 The short-run supply function for each firm is q = p / 10, and the industry short-run supply function is Qs = (n) q = 250 p / 10 = 25 p
2.5 pvsr = 300
2.6 psr = 133.33, Q = 3,333.33
2.7 p = $100, Q1 = 3500, q = 10, n1 = 350, π = 0
2022-03-22