Consider a perfectly competitive market with 10 firms firm

Reference no: EM13377989

Consider a perfectly competitive market with 10 firms; Firm 1, Firm 2...Firm 10. Firm 1 through Firm 9 have the same cost function given by C(qi)=2q^2,

where q is the quantity produced by firm i. Firm 10 has a different cost function C(q10)= 3q^2.Let Q represent the aggregate output of all firms, Q= \(\sum_{i}^{10}qi\)

Consumers' aggregate inverse demand function is given by P(Q)=90-12Q

1. T/F Firms have an increasing returns to scale technology. Explain

2.Solve for the equilibrium price and quantities (P, q1, q2 ..... q10).What is the equilibrium price?

a-1

b-4

c-3

d-10

e-9

f-1/2

3.What are the equlibrium quantities (q1, q2... ,q10)?.

A-q1, q2... ,q10 = 2

B-q1, q2,...,q9= 2 q10=1/2

c-q1, q2,.... ,q9= 3/2 q10=1/2

d-q1, q2, ... ,q9, q10= 3/2

e- q1, q2, ... ,q9= 3/4 q10=1/2

f-q1, q2,.... ,q9= 3 q10=1/2

g-none of the above

4. Does Firm 10 produce at all in equillibrium? Explain why?

Reference no: EM13377989

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