a. Here we want to describe the competitive market for leaf-blowers. Set up a short run...

  

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a. Here we want to describe the competitive market for leaf-blowers. Set up a short run perfectly competitive market model graph, labelling all the cost curves and market supply and demand. Assume the firm starts with profit = $0 and the market price is $100. Assume each firm produces 40 of output to start. q Q b. In order to promote tidier lawns, assume the government decides to provide a $20 subsidy to each firm for every leaf blower they produce and sell (treat this like a $20 per unit reduction in cost for each unit produced). Explain the changes in firm costs, profit, output and market equilibrium in the short run. q a. Here we want to describe the competitive market for leaf-blowers. Set up a short run perfectly competitive market model graph, labelling all the cost curves and market supply and demand. Assume the firm starts with profit = $0 and the market price is $100. Assume each firm produces 40 of output to start. q Q b. In order to promote tidier lawns, assume the government decides to provide a $20 subsidy to each firm for every leaf blower they produce and sell (treat this like a $20 per unit reduction in cost for each unit produced). Explain the changes in firm costs, profit, output and market equilibrium in the short run. q

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In a perfectly competitive market for leaf blowers each firm is a price taker and faces a horizontal demand curve at the market price Heres how you ca... View the full answer