Suppose That All Firms in a Constant-Cost Industry Have the Following

question 69

Essay

Suppose that all firms in a constant-cost industry have the following long-run cost curve:
c(q)= 4q² + 100q + 100
The demand in this market is given by Q^D = 1280 - 2p.Suppose the number of firms in the market is restricted to 80
a.Derive the supply curve with this restriction.Find the market equilibrium price and quantity with the restriction.
b.If firms are allowed to buy and sell these permits in an open market,what will be the rental price of permits? Will firm's that own permits make profit? Briefly explain.
c.How much deadweight loss is generated by the permit system? Provide a graph showing the region of this deadweight loss.
d.Suppose the government abandons the permit system and simply imposes a fixed fee on firms in the market.If the fee is set equal to the permit price you found in c. ,what will be the equilibrium price,quantity,number of firms and deadweight loss?

---

Definitions:

Product Manager

A professional role responsible for the development, marketing, and overall management of a product or product line throughout its lifecycle.

Organization's Product Items

Specific versions of products that an organization offers within its overall product line, distinguished by features, size, price, or other attributes.

CDI/BDI Marketing Dashboard

A measurement tool that combines Category Development Index (CDI) and Brand Development Index (BDI) to track the performance and potential of a brand within specific markets.

Households Without Children

Refers to living arrangements consisting of one or more adults who do not have children living with them.