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?