Original Price: $4.99 Now at: $2.99 Reads (585)

Determination of equilibrium price, output and the number of firms in a monopolistically competitive industry as well as the effect of a franchise tax and technical innovation.

All firms in a Cournot monopolistically competitive industry have the same cost function C(q)= 25 + 10q. Market demand is Q = 110 - p.
(i) Calculate the equilibrium price, firm output, total output and number of firms in the industry.
(ii) How would these values change if a franchise tax of $75 were imposed on each firm?
(iii) What if a technical innovation were to reduce unit production costs to $5?

Attached file(s)

Solution Attachment

Solution document is in Word format