Question: Could you solve please??? 7. Short questions (5 points) a) Assume that the marginal cost of firms in an industry is given by MC =

Could you solve please???

7. Short questions (5 points) a) Assume that the marginal cost of firms in an industry is given by MC = 2y and there are no fixed costs. Demand is simply given by y = 1000 and all demand will be met at the price which equals to minimum average cost. What will be the price in this market, how many firms will operate in it and what output will each firm produce? (3) b) When countries open their borders to trade with other countries, con- sumer good prices tend to fall. Based on what you know about supply, demand and equilibriums, explain the fall in consumer prices. (2)

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