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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