3. Suppose the total cost of q units produced by an increasing-cost industry is given by C(q) =q² +8q On the demand side, the aggregate willingness to pay for q units of the good is WTP(q) = 100 q-29² a) Find the aggregate supply and aggregate demand functions. b) Derive the equlibrium assuming the market is competitive. c) Find the maximum amount consumers are willing to pay for the equilibrium output. What is the consumers' surplus equal to? d) Find the total cost of the equilibrium output. What is the average cost equal to? What is the profit of the industry equal to? e) Calculate the total surplus or welfare in equilibrium.

3. Suppose the total cost of q units produced by an increasing-cost industry is given by C(q) =q² +8q On the demand side, the aggregate willingness to pay for q units of the good is WTP(q) = 100 q-29² a) Find the aggregate supply and aggregate demand functions. b) Derive the equlibrium assuming the market is competitive. c) Find the maximum amount consumers are willing to pay for the equilibrium output. What is the consumers' surplus equal to? d) Find the total cost of the equilibrium output. What is the average cost equal to? What is the profit of the industry equal to? e) Calculate the total surplus or welfare in equilibrium.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 10PA

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