Consider a number of firms facing identical total cost function of the form: TC = Q3 -6Q2+10Q. The marginal cost associated with the cost function…
Consider a number of firms facing identical total cost function of the form: TC = Q3 -6Q2+10Q. The marginal cost associated with the cost function is: MC=3Q2 -12Q+10. A) Calculate the level of production that minimizes average variable cost. (10 marks) B) Calculate the shutdown price for each firm. (10 marks) C) Suppose market demand is given by Q=50-4P. Calculate the competitive equilibrium price and quantity for each firm. Assuming all firms are symmetric, how many exist in the long-run? (10 marks)
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