ISI 2014

[Kajol]

Can anyone please explain the solution to part ii of this question. How many firms will be there in the market ?

[Dr. Strange]

let no. of firms = n
each firm produces x
p=100-nx
profit of firm i = (100-nx)x-(25+x^2)
differentiating wrt x we get 50=x(n+1)
at prfct equilm,total profit of industry=0
(100-nx)(nx)-n(25+x^2)=0
solving,
x=0.5,n=99, p=50.5, qtotal=49.5

[Kajol]

Thanks!

On Apr 29, 2016 1:31 AM, "Dr. Strange [via Discussion forum]" <[hidden email]> wrote:

let no. of firms = n
each firm produces x
p=100-nx
profit of firm i = (100-nx)x-(25+x^2)
differentiating wrt x we get 50=x(n+1)
at prfct equilm,total profit of industry=0
(100-nx)(nx)-n(25+x^2)=0
solving,
x=0.5,n=99, p=50.5, qtotal=49.5

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