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Suppose that on a Saturday night there are 20 people who'd eachlike pizza. Each person's willingness to pay for pizza is given bythe equation W2Pi=10-Qi, where W2Pi is the maximum amount person iis willing to pay for pizza number Qi (eg, the person is willing topay $9 for the first pizza, $8 for the second, etc.). There are 10stores that will deliver a pizza. Each store has the followingtotal cost equation: TCj=16+Qj*Qj, where Qj is the number of pizzasproduced by firm j and Qj*Qj means Qj squared. The correspondingmarginal cost equation is MCj=2*Qj. You may assume the market isperfectly competitive. Please answer the followingquestions.

Derive the demand curve for a typical individual and the supplycurve for a typical firm.
Derive the market demand and supply curves.
What is the equilibrium price and quantity of pizza?
How many pizzas does each person buy? How much consumer surplusdoes each person receive?
How many pizzas does each firm produce? How much profit doeseach firm earn?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9822862

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