jnu 2007

[seema]

The long run cost fn for a commodity sold  in a perfectly competitive mkt is given by C(q)=q^3-2q^2+2q. The equilibrium price of the comm in the long run is
a) 4
b) 2
c) 1
d) 1/2

[ritu]

hi seema:)
in the long rum,in competitive market price is driven down to average cost....so price=min ( AC)
just find AC and mininse it....u will see that its minimum for q=1 which means at q=1 ,ac=1nd thus price=1

[tim]

hey ritu :)
did u do the next questn of the same ppr ?

suppose a monoplist firm faces a demand curve given by D=1-p. If the firm's output in SR eqm is 0.1 unit, what is the MC of the firm at the eqm level of output ?

[aastha]

@ tim

the marginal cost will be equal to 0.8

[tim]

thnk u aastha :)

[sweta]

@aastha can u plz elaborate ur answer...i mean how did u arive at the solution!

i cud understand MR=0.1
THEN How to proceed ?

[aastha]

@ sweta

inverse demand function : p= 1-q
                        TR :p*q=q-q^2
                         MR=1-2q
                          here q = 0.1 so MR = 0.8
                         at profit maximizing condition MR=MC
                         so MC = 0.8

[sanjeev]

dear Astha,

in the problem P = 1 - p!
then why we will take p = 1 - q?

thanks