Problem Set 1 Perfect Competition

1. 給定下列函數:

市場需求函數 : QD = 6, 500 − 100P

市場供給函數 : QS = 1, 200P
q2
總成本函數 : C(q) = 722 +
200
2q
邊際成本函數 : M C(q) =
200

假設所有廠商均相同, 且市場為完全競爭, 則:

(a) 求市場的均衡價格、數量、個別廠商的產出、利潤

(b) 你預期在長期下, 產業會有廠商進入或退出? 進入或退出對於市場均衡有何影響?

(c) 短期下, 每家廠商願意銷售的最低價格為何? 在該價格下, 廠商的利潤為正、負, 或為零?

請解釋之。

2. Wheat market is perfectly competitive. Each wheat farmer has a U-shaped average
total cost curve that reaches a minimum of $3 when 10 bushels are produced.

(a) If the market demand for wheat is give by Q(P ) = 3, 600 − 200P , where Q is the
total number of bushels demanded in the market and P is the price per bushel. How
much wheat in total will be demanded, and how many wheat farmers will there be
in the long-run equilibrium?

(b) Suppose demand shifts to Q(P ) = 7, 200 − 200P . If the number of farmers is fixed
in the short run and each produces with a marginal cost given by M C(q) = 0.3q,
where q denotes the number of bushels produced. What is the market price with
this new demand? What is the profit a typical farmer makes?

3. 在完全競爭市場中, 若市場需求增加, 則在短期與長期中, 市場價格、個別廠商產量、市場總產

量、個別廠商利潤、廠商家數會有何變化?

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4. Consider a competitive market whose demand is given by Q(P ) = 500 − 50P . There
are 200 identical firms in the market, each producing with a technology characterized
by the total cost function, T C(q) = 4 + 0.02nq + q 2 , marginal cost function, M C(q) =
0.02n + 2q, where n and q denote the number of firms and quantity produced by each
firms, respectively. Apparently, each firm’s marginal cost is decreasing in the number of
firms coexisting in the market.

(a) How much profit does each firm make in the short-run equilibrium?

(b) In the long run, firms can freely enter or exit the market. How many firms are there
in the market when it reaches the long-run equilibrium? How many units of output
does each firm produce in the long-run equilibrium? What is the corresponding
marginal cost? [Hint: The long run average cost curve that reaches minimum point
at q = 2]

5. Assume the following for a certain industry :

(a) there is no incentive for firms to enter or exit the industry

(b) for some firms in the industry, short-run average total cost is greater than long-run
average total cost at the level of output where marginal revenue equals marginal
cost

(c) all firms in the industry are currently producing the quantity of output at which
marginal revenue equals marginal cost.

Is the industry in long-run competitive equilibrium?

6. 經濟學家依據產品市場結構競爭性的準則, 將市場型態分為哪幾種? 另請試解釋 「規模經濟」

之意涵。

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7. Suppose there are 100 firms each with a short run total cost of T C = q 2 + q + 10, so
that marginal cost is M C = 2q + 1. The market demand is given by Qd = 1050 − 50P

(a) What is the market supply curve?

(b) What is the equilibrium quantity and price, namely, Q and P?

(c) What is the quantity of individual firm, namely, qi ?

(d) What is the firm’s profit?

8. A perfectly competitive firm has total cost and marginal function given by

ST C(q) = q 2 + 8q + 1
SM C(q) = 2q + 8

(a) If there are 500 identical firms in its industry, what is the industry supply curve?

(b) If the market demand function is Qd = −50P + 1000, what is the equilibrium level
of output for an individual firm?

9. In a perfectly competitive market, technological advances bring _____ economic

profits for producers and _____ lower prices for consumers.

(a) permanent; permanently

(b) permanent; temporarily

(c) temporary; permanently

(d) temporary; temporarily

10. (TRUE or FALSE) A firm’s marginal cost curve is always its supply curve.

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