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November 23, 2014

Homework Help: Microeconomics

Posted by Chi on Monday, March 31, 2008 at 2:20pm.

1. A perfectly competitive industry comprises of 35 competitive, profit-maximizing firms, each of which
has short-run total costs and marginal costs of
SMC = 0.25q
STC = 20 + 0.125q(squared)

The market demand curve is P = 20 − 0.05Q
(a) Find P, q and Q
(b) Suppose a tax of $2 per unit of output is imposed on the firms in the industry, find the new P, q, and Q.

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