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DJP c) P3 d) P4 Scenario 1: Perfect Competition. Consider a perfectly competitive market with 1,000 firms, where all firms ha

the shore in the shon e ach the short teach in e rs leadi n cm was - A number of new firms will enter the Quantity and an inc
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Answer #1

(1) (B) each firm will earn $500 as economic profit.

total unit sold 100000

no of firm 1000

no of unit produced by each firm = 100000/1000= 100

total revenue = 100*20=2000

cost per unit = 15*100=1500

economic profit = TR- TVC= 2000-1500 = $500

2(D)

reason when some of the firm exit from industry it leads to fall in the quantity of unit and it leads to increase in equilibrium price.

3(A)

  • New firms enter supply increases from S1 to S2 until the price falls
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