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July 30, 2014

Homework Help: Micreoeconomics

Posted by Chi on Monday, March 31, 2008 at 2:21pm.

1. Assume a perfectly competitive constant cost industry, currently in long-run equilibrium. Market
demand in the industry is given by Q = 1500 - 25P. The short-run market supply curve is given by:
Q = 15P - 100 for P B 10
= 0 for P < 10
There are 25 firms in the industry.
(a) Calculate the equilibrium market price and quantity and the amount produced by each firm.
(b) Each firm is currently operating at the optimal plant size. What must be the minimum short-run average
variable costs for the firm and the efficient average cost? Explain

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