Question

Consider a monopolistically competitive market with N firms. Each firm's business opportunities are described by the following equations: Demand: Q=160N−P Marginal Revenue: MR=160N−4Q Total Cost: TC=150+Q2 Marginal Cost: MC=4Q How many units does each firm produce?

Answer 1

Answer:

Each firm will produce 20 ÷ N units

Explanation:

Given that

Q = 160N − P

MR = 160N − 4Q

TC = 150 + Q2

MC = 4Q

The computation of the number of units that each firm produce is as follows:-

MR = MC

where

MR = 160N − 4Q

And MC = 4Q

Now we equate

So, the equation is

160 ÷ N - 4Q = 4Q

160 ÷ N = 8Q

Q = 160 ÷ 8N

Q = 20 ÷ N

So, each firm will produce 20 ÷ N units.