There are 96 producers in the perfectly competitive market of Queen Elizabeth II commemorative tea cosies....

 

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There are 96 producers in the perfectly competitive market of Queen Elizabeth II commemorative tea cosies. Of those 96, 70 each have the following short-run total cost curve: STC(Q) = 22.5 +0.1Q² + 20Q, where Q is output (meaning each have short-run marginal cost curve SMC(Q) = 0.2Q +20). The remaining 26 each have the following short-run total cost curve: STC(Q) = 40 + 0.1Q² (meaning each have the short-run marginal cost curve SMC(Q) = 0.2Q). a) Assuming all fixed costs are sunk in the short run, find each producer's short- run supply curve, and also the market supply curve. b) Assuming all fixed costs are nonsunk in the short-run, find each producer's short-run supply curve, and also the market supply curve. c) Assume again that all fixed costs are sunk in the short run. If the market de- mand curve is Q = 8990-300P, what is the short-run equilibrium price and quantity? d) Assume again that all fixed costs are nonsunk in the short run. If the market demand curve is again Q = 8990-300P, what is the short-run equilibrium price and quantity? e) Suppose that in the long run, all firms face the following total cost curve: TC(Q) = 600.625 +0.1Q² (meaning each have the marginal cost curve MC(Q) = 0.2Q). As well, firm entry and exit is possible in the long run. Assuming market demand is Q = 8990-300P, how many producers will there be in the market in the long run? There are 96 producers in the perfectly competitive market of Queen Elizabeth II commemorative tea cosies. Of those 96, 70 each have the following short-run total cost curve: STC(Q) = 22.5 +0.1Q² + 20Q, where Q is output (meaning each have short-run marginal cost curve SMC(Q) = 0.2Q +20). The remaining 26 each have the following short-run total cost curve: STC(Q) = 40 + 0.1Q² (meaning each have the short-run marginal cost curve SMC(Q) = 0.2Q). a) Assuming all fixed costs are sunk in the short run, find each producer's short- run supply curve, and also the market supply curve. b) Assuming all fixed costs are nonsunk in the short-run, find each producer's short-run supply curve, and also the market supply curve. c) Assume again that all fixed costs are sunk in the short run. If the market de- mand curve is Q = 8990-300P, what is the short-run equilibrium price and quantity? d) Assume again that all fixed costs are nonsunk in the short run. If the market demand curve is again Q = 8990-300P, what is the short-run equilibrium price and quantity? e) Suppose that in the long run, all firms face the following total cost curve: TC(Q) = 600.625 +0.1Q² (meaning each have the marginal cost curve MC(Q) = 0.2Q). As well, firm entry and exit is possible in the long run. Assuming market demand is Q = 8990-300P, how many producers will there be in the market in the long run?

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