4 The demand for bicycles is given by the equation:Q = 1000 – 5PThere are currently 100 identical firms in thiscompetitive market, each with the cost function:25C(q) =9 +204 + 502%3!Calculate the short-run market equilibrium,including the market price and quantity, the numberof units each firm will produce, and the profits ofeach firm. How much profit and producer surplus iseach firm earning?a)b) If the government imposes a per unit tax of $90 perbicycle, how would this change the marketequilibrium? How would the tax burden be sharedby the consumers and bicycle manufacturers?c) If the government decides not to impose the tax,what is the long run equilibrium to include themarket price and quantity, and the number of firmsin the market? Assume the costs of the firms staythe same in the long run.

Given information Market Demand function Q=1000-5P Firms Cost functionC=252q2+20q+50 There are 100…

The demand for bicycles is given by the equation: Q = 1000 – 5P - There are currently 100 identical firms in this competitive market, each with the cost function: 25 C(q) - + 20g + 50 a) Calculate the short-run market equilibrium, including the market price and quantity, the number of units each firm will produce, and the profits of each firm. How much profit and producer surplus is each firm earning? b) If the government imposes a per unit tax of $90 per bicycle, how would this change the market equilibrium? How would the tax burden be shared by the consumers and bicycle manufacturers? c) If the government decides not to impose the tax, what is the long run equilibrium to include the market price and quantity, and the number of firms in the market? Assume the costs of the firms stay the same in the long run.

The demand for bicycles is given by the equation: Q = 1000 – 5P - There are currently 100 identical firms in this competitive market, each with the cost function: 25 C(q) - + 20g + 50 a) Calculate the short-run market equilibrium, including the market price and quantity, the number of units each firm will produce, and the profits of each firm. How much profit and producer surplus is each firm earning? b) If the government imposes a per unit tax of $90 per bicycle, how would this change the market equilibrium? How would the tax burden be shared by the consumers and bicycle manufacturers? c) If the government decides not to impose the tax, what is the long run equilibrium to include the market price and quantity, and the number of firms in the market? Assume the costs of the firms stay the same in the long run.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.6P

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