Mkt dd curve Q=1500-50P
long run operating costs are TC=0.5q^2-10q
ss curve for entrepreneurs is Q=0.25w w=wage rate
each firm requires 1 entrepreneurs i.e qty of entrepreneurs hired= no. of firms
long run tc for each firm ; TC=0.5q^2-10q+w
a) find long run euilibrium qty produced. qty prduced by each firm ? equilibrium price ? no of entrepreneurs hired and their wage rate ? no. of firms ?
b) demand shifts outward to Q-2428-50P how will your ans change?
c)entrepreneurs responsible for upward sloping ss curve so they will receive rents generated...calculate the rents in part a and part b. show that these are equal to the value of producer surplus generated.
please answer this query asap...m really confused abt how to solve this....
Hey, for the first part price in the long run equilibrium will be minimum of average cost. So minimize 0.5q-10+w/q wrt q. U get q=root(2w). Min AC comes out to be root(2w)-10. This is the price. From here get quantity demanded in terms of w. Quantity supplied is 0.25w.root(2w). Equate them to get w. U can get the other variables from there. Now see if u can do the other parts.