The cost curve for a typical perfect competitive firm in thecoffee market is given by the following:
T Ci = 128 + 4qi + 2qi2
The market demand curve for coffee is given by the following:
P = 84 − 2q
(a) (i) Find the long run competitive equilibrium. That is,identify the equilibrium price and quantity, output for each firm,the number of firms in the industry and the level of producer andconsumer surplus. Show your answer in a clear well-labelleddiagram.
(ii) What is the value of own price elasticity of demand at themarket equilibrium? Is demand elastic or inelastic?
(b) (i) Assume now that the government
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