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Assume that the market for Coca-cola in your area is perfectly competitive, with Demand P= 11-0.1Qd and supply P= 1+ 0.1Qs. Each firm that sells Coca-cola is indentical, with Total Cost TC= 1+0.5Q+2Q? Which gives Marginal Cost MC= 0.5+4Q. Currently the market is in equilibrium, and Coca-cola for $6 a unit and $50 units are sold.
a. graph the market
b. Identify the consumer and producer surplus on the graph.
c. Calculate the consumer surplus.
d. Graph the firm. Include the marginal revenue, marginal cost, and average total cost curves.
e. how much does each firm produce?
f. how much profit does each firm earn?
Present Worth Analysis, Annual Worth Analysis, Rate of Return Analysis, Incremental Analysis
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