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In a market the inverse demand function is given by P(q) = 100 - 29

Sociology

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In a market the inverse demand function is given by P(q) = 100 - 29. The cost function for any firm is C(q) = 20 + 49 (if a firm exits the market, then its cost is zero). (a) If there is only one firm in the market, what are the price and market supply in equilibrium? Now too many firms want to enter this industry, Government is considering selling licenses to limit the number of firms in the market. We assume that all firms are Cournot oligopolists. (b) If the government wants to limit the number of firms to 2, what is the price range of the license? (c) To maximize the government profits, what is the price of the license? What is the number of firms in the market? (d) To maximize the social surplus (government is also a part of society), what should be the number of firms in the market?