Suppose there are n identical firms operating in a competiti

Suppose there are n identical firms operating in a competitive environment Each of the firm has cost function C(a)4x7+8. The Market demand function is of the form P 40-2X (4 marks) Calculate the equilibrium number of firms in the industry(4 marks) (4 marks) (3 marks) i) Compute the equilibrium price and output. i) Illustrate mathematically the effect of a decrease in the number of firms on the market price Using the necessary economic tools explain why are monopolies inefficient.

Solution

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