PROBLEM I. Suppose that there are 6 price-taker milk farms in a town They produce milk...

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PROBLEM I. Suppose that there are 6 price-taker milk farms in a town They produce milk of the same quality, and each has a cost function C() 0.04q2. The market demand function for milk in this town is given by Q(p)- 1600 325p. 1. The market supply function for milk in this town is (a) Q(p)1600 (b) Qs(p) = 75p (c) Q(p) = 125p (d) Q(p 1200 (e) Q(p)=25p 325p. 400p Q2. What is the competitive equilibrium price of milk in this town? (a) $3.00 (b) $3.50 (c) $4.25 (d) $2.75 (e) $4.00

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