C = q + q2 +q3
Q = 24 – p
AC = 1 + q + q2
q = -0.5
At q = -0.5 AC is minimum
min(AC) = 1 + q + q2
min(AC) = 1 + (-0.5) + (-0.5)2
P = 0.75
In the long-run each firm will produce q = 0.5
Total industry production at P = 0.75
Q = 24 – 0.75 = 23.25
Number of firms:
x \times q = Q
If a tax of $1 per unit is collected from each firm new AC function:
AC = 2 + q + q2
At q = -0.5
P = min(AC) = 2 + (-0.5) + (-0.5)2 = 1.75
In the long-run each firm will produce q = 0.5
Total industry production at P = 1.75
Q = 24 – 1.75 = 22.25
Number of firms:
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