Question

1. Market demand is given as Q = 220 - 4P. Market supply is given as Q = 2P + 40. Each identical firm has MC = 0.5Q and ATC =

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Answer #1

Sol 1:

Firm is in equilibrium where Qd = Qs

220 - 4P = 2P + 40

180 = 6P

180/6 = P

30 = price

Qd = 220 - 4(30)

= 220 - 120

= 100

ATC = 0.25Q

= 0.25 x 100 = 25

(NOTE : As per the policy , we have to solve only 1 question per post. So , please post the remaining question in separate post. )

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