Econ 98-Chiu Perfect Competition Worksheet Spring 2004PQdQs0 100 5019555290603856548070575756708076585860909559510 50 100Market for CornThe market for corn is relatively competitive. Plot the market demand and market supply for corn. Mathematically solve for the equilibrium market price and quantity for corn. Label P* and Q*. Assume that demand and supply are linear functions.Market Individual FirmLets assume that in Stage 1 each individual firm produces 5 bushels of corn. Also assume that the individual firm is making positive profits in the corn market. Plot both of these conditions in the individual firm graph above. How many firms are in the corn market? Label P* and q* for the individual firm.1 of 2Econ 98-Chiu Perfect Competition Worksheet Spring 2004Market Individual FirmLets assume that market is in Stage 2. Will individual firms continue to produce 5 bushels of corn and price at P*? Show the Stage 2 effects in the corn market with the graphs above. Label P'', Q'', and q''. Do we have less or more firms in the corn-market in Stage 2? Why? How much profits do the individual firms make in the corn market?2 of
View Full Document
Unlocking...