If it installs technology 1, its yearly costs will be C1 (q) = 3600 + 65q + 36q 2 . If it installs technology 2, they will be C2 (q) = 900 + 900q + q 2 . (a) What is the minimum ecient scale of each production technology? (b) Which technology would the rm prefer (purely from a cost standpoint) if it expected that each year it had to manufacture 40 units? 2. If the market demand curve is Q = 100 P, what is the market price elasticity of demand? If the supply curve of individual rms is q = p and there are 50 identical rms in the market, draw the residual demand facing any one rm. What is the residual demand elasticity facing one rm at the competitive equilibrium?
If it installs technology 1, its yearly costs will be C1 (q) = 3600 + 65q + 36q 2 . If it installs technology 2, they will be C2 (q) = 900 + 900q + q…
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