# 3. Consider a monopolistically competitive market of the good X with N ﬁrms. Each ﬁrm” 5 business opportunities are described by the following equations: Demand: X=%—P 101′.) Marginal Revenue: MR

3. Consider a monopolistically competitive market of the good X with N ﬁrms. Each ﬁrm” 5

business opportunities are described by the following equations: Demand: X=%—P 101′.) Marginal Revenue: MR = T — 2X

Total Cost: TC = 50 + X3

Marginal Cost: M C = 2)!

a. How does N, the number of ﬁrms in the market, affect each firm’s demand curve? Why? 13. How many units does each ﬁrm produce? (The answers to this and the next two questions

depend on N.) c. price does each ﬁrm charge? d. How much proﬁt does each ﬁrm make? e. In the long run1 how many ﬁrms will exist in this market?

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