Question

13. The market demand curve for a good is x = 200 \text{\textendash} 3p. Suppose that there are 10 small firms in the industry, where each firm has the identical short run marginal cost function $MC = 5 + 2x_i$, with $x_i$ being the output of a typical firm $i$. The marginal cost of the dominant firm is 5. a) Calculate the short run equilibrium price and output of the industry. What are the outputs of the dominant firm and a small firm? b) Suppose that the long run marginal cost of a small firm is 20 and that of the dominant firm is $0.1x_d$, where $x_d$ is the output of the dominant firm. Determine the long run industry output, the output of a small firm and the output of the dominant firm.

          13. The market demand curve for a good is x = 200 \text{\textendash} 3p. Suppose that there
are 10 small firms in the industry, where each firm has the identical short
run marginal cost function $MC = 5 + 2x_i$, with $x_i$ being the output of a
typical firm $i$. The marginal cost of the dominant firm is 5.
a) Calculate the short run equilibrium price and output of the industry.
What are the outputs of the dominant firm and a small firm?
b) Suppose that the long run marginal cost of a small firm is 20 and that
of the dominant firm is $0.1x_d$, where $x_d$ is the output of the dominant
firm. Determine the long run industry output, the output of a small
firm and the output of the dominant firm.

13. The market demand curve for a good is x = 200 – 3p. Suppose that there
are 10 small firms in the industry, where each firm has the identical short
run marginal cost function MC = 5 + 2xi, with xi being the output of a
typical firm i. The marginal cost of the dominant firm is 5.
a) Calculate the short run equilibrium price and output of the industry.
What are the outputs of the dominant firm and a small firm?
b) Suppose that the long run marginal cost of a small firm is 20 and that
of the dominant firm is 0.1xd, where xd is the output of the dominant
firm. Determine the long run industry output, the output of a small
firm and the output of the dominant firm.

Added by Steven K.

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