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Economics

Propylene is used to make plastic. The propylene industry is perfectly competitive and each producer has a long run total cost function given by LTC= 1/3Q(to the 3rd power) - 6Q(to the 2nd power) +40Q

Where Q denotes the output of the individual firm.
The market demand for propylene is
X = 2200 - 100P

Where X and P denote the market output and price respectively.

(a) find out the optimal output produced by each firm at the long run competitive equilibrium (LRCE).

(b) find out the market price and market output at the LRCE.

(d) Suppose the demand curve shifts to
X = A - 100P

Where A is a positive number. find out how large A would have to be so that in the new LRCE, the number of firms is twice what it was in the initial equilibrium.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M975611

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