Marginal and average cost, Managerial Economics

In the city of Gelato the market for ice cream is perfectly competitive. Aggregate demand for ice cream is:


where p is the price for one cone of ice cream. All ice cream producers in the city have the similar total cost function:


where Qi  represents the number of ice cream cones firm i makes. Suppose that the market is in equilibrium.

a) Derive the firms' marginal and average cost. 

b) Compute price and quantity in equilibrium.




Posted Date: 3/26/2013 2:51:17 AM | Location : United States

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