Question: Need help with question, do not understand , please explain each step process 3. (7 points) Market demand is _ ,p[0,a] cal{Of pa , (5)

Need help with question, do not understand , please explain each step process

Need help with question, do not understand , please explain each step

3. (7 points) Market demand is _ ,p[0,a] cal{Of pa , (5) (1,?) > 0. There are n competitive rms in the market. For i = 1, ...,n, rm i hires 11- units of labor at unit cost w > 0, which yields q.- = 213' units of output. Here, or E (0, 1). (a) Suppose that n = 1. i. Find rm 1's supply as a function of p. (1 point) ii. Find the competitive equilibrium {p*, qi'} for any a 6 (0,1). (1 point) iii. Find the competitive equilibrium {p*, qi'} for a = 0.5. (1 point) (b) Suppose that n = 3 and a = 0.5. Suppose further that rm 1 is given a subsidy on production, i.e., for each unit of output produced by rm 1, the government gives 3 dollars to rm 1. i. For 'i = 1, 2, 3, nd rm i's total cost, TCE- ((1,). (1 point) ii. Find the competitive equilibrium {p*, qi', (1;, qg}. (1 point) iii. What is the effect of s on {p*, qf, (13,913}? (2 points)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!