Thread: Microeconomics- competitive market and demand

Hi,

I am in desperate need of help for some micro questions. This is one of them
Can anyone help?

Thanks in advance!


Consider a competitive market in which the market demand for the product

IS

expressed as:
P=75-1.5Q

and the supply of the product is expressed as:

P

= 25 + 0.50Q.

Price, P, is in dollars per unit sold, and Q represents rate of production and sales 10

hundreds of units per day. The typical firm in this market has a marginal cost of:
MC

= 2.5 + 10Q.

a) Determine the equilibrium market price and rate of sales.
b) Determine the rate of sales of the typical firm, given your answer to
part a) above.
c)

If the market demand were to increase to P = 100 - 1.5Q, what would
the new price and rate of sales in the market be? What would the new
rate of sales for the typical firm be?
d) If the original supply and demand represented a long-run equilibrium
condition in the market, would the new equilibrium c) represent a new
long-run equilibrium for the typical firm?
e) An output tax is imposed on ONE firm's output. What will happen to
the market price? Will the production of this firm stay the same?
Would the effect have been the same if the tax had been imposed on

all firms equally?

are you sure you got the values for demand and supply question correct, because, when you expressed both of them in terms of Q:
demand Q = 50-(2/3)p

supply Q = 2p - 50.

when finding market equilibrium and equate them you would get a price of zero dollar, free product... sth which is quite nonsense in microecon tutorial question