A good is represented by a market demand curve Q = 100 – P. In this market, there are an unlimited number of potential firms whose cost curve is given as TC = Q + Q2. a) What is the long run equilibrium price, assuming free entry of firms? (8 marks) b) How many firms will there be?

/in /by

A good is represented by a market demand curve Q = 100 – P. In this
market, there are an unlimited number of potential firms whose cost
curve is given as TC = Q + Q2.

a)    What is the long run equilibrium price, assuming free entry
of firms?

(8 marks)

b)    How many firms will there be?

You might also like
For each of the following production functions, determine whether returns to scale are decreasing, constant or increasing. a. Q = 20K0.6 L0.5 b. Q = 100 + 3K + 2L c. Q = K/L d. Given the production function Q = 100K0.5 L0.5, find out MPL and MPK.
“If the business operates in the economy, there will be stage of peak, slow down and losses also. That’s the part of business”. Which concept is explain in the statement?
The demand and supply functions of a good are given by QD = 24 − 3P; QS = 4 + 2P where P, QD and QS denote price, quantity demanded and quantity supplied, respectively. Find the inverse demand and supply functions and the market equilibrium price and quantity.
If the price of powdered milk, a substitute for fresh milk, falls then A. the supply curve of fresh milk will shift to the right. B. the demand curve for fresh milk will shift to the right, C. the equilibrium quantity and price of fresh milk will not change. D. the quantity of fresh milk demanded will increase. E. the demand curve for fresh milk will shift to the left.
When the economy is producing at full capacity, the aggregate supply curve becomes a. horizontal. b. downward sloping. c. vertical. d. upward sloping.
Suppose that a consumer with income of birr 90 wants to spend the whole income on good B and good A. Assume that the goods are consumed on a one-to-one basis and one good is worthless without the other. The price of good A and B are both 3 birr. A. How many units of good A&B will the consumer buy? B. If the price of good A increases to birr 6, how many he/she buy of each? C.vWhat type of preferences does consumption of the two goods represent? What is the shape of the indifference curve for this type of preference?
A firm’s demand function for good Z is estimated as follows: Qz = 4500- 1/8 Pz + 1/5 Pa – 1/9 Pb + 2Y Where: Pz is the price of good z, Pa is the price of good a, Pb is the price of good b, and Y is income. (i) Justify whether the law of demand is valid here. [5 marks] (ii) According to theories, explain the two main reasons why the law of demand is always valid? [5 marks] (iii) Is good Z a normal good? [5 marks] (iv) Explain whether goods a and b are related to good z. [5 marks]
Select a public limited company of your choice which has some degree of market power. In an essay of 2000 words or fewer, evaluate the pricing strategies it employs for its core product/business in order to increase its market share and profitability within its industry