Problem 4 Consider an industry in which the typical firm has total cost given by TC = 128+2q2. Suppose that inverse market demand is P=110-3Q. Assuming that each firm tries to operate at the minimuim efficient scale, how many firms can enter this market? What would be the HHI assuming all firms have equal market shares? How would you classify the resulting market structure? What is the Lerner index?

Problem 4 Consider an industry in which the typical firm has total cost given by TC = 128+2q2. Suppose that inverse market demand is P=110-3Q. Assuming that each firm tries to operate at the minimuim efficient scale, how many firms can enter this market? What would be the HHI assuming all firms have equal market shares? How would you classify the resulting market structure? What is the Lerner index?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.9P

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