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30 June, 18:39

Consider a monopolistically competitive market with N firms. Each firm's business opportunities are described by the following equations: Demand: Q=160N-P Marginal Revenue: MR=160N-4Q Total Cost: TC=150+Q2 Marginal Cost: MC=4Q How many units does each firm produce?

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  1. 30 June, 18:56
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    Each firm will produce 20 : N units

    Explanation:

    Given that

    Q = 160N - P

    MR = 160N - 4Q

    TC = 150 + Q2

    MC = 4Q

    The computation of the number of units that each firm produce is as follows:-

    MR = MC

    where

    MR = 160N - 4Q

    And MC = 4Q

    Now we equate

    So, the equation is

    160 : N - 4Q = 4Q

    160 : N = 8Q

    Q = 160 : 8N

    Q = 20 : N

    So, each firm will produce 20 : N units.
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