Question

1. a. Each of the 10 firms in a competitive market has a cost function of C = 25 + q^2. The market demand function is Q = 120 - p. Determine the equilibrium price, quantity per firm, and market quantity.
   b. Given the information in part a, what effect does a specific tax of $2.40 per unit have on the equilibrium price and quantities?

2. Suppose that market demand for a good is Q = 480 - 2p. The marginal cost is MC = 2Q. Calculate the deadweight loss resulting from a monopoly in this market. (Hint: first calculate the price and quantity under competitive market equilibrium; second, calculate the price and quantity under the monopolistic market.

Answer 1

Each firm will produce that level of output for which marginal cost=price
C = 25 + q^2
Marginal cost MC=dC/dq=2q
Thus each firm supply curve : P=2q or q=P/2
There 10 such firms, so market supply curve is Q=10*P/2=5P
demand function is Q = 120 - P
For equilibrium market supply=market demand
Thus 120-P=5P. Solving for P we get the equilibrium price P=20
Quantity per firm=P/2=20/2=10
Market quantity=5P=5*20=100

Notes please give like I have Only knew 1 answer so I did thnks