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Questions › DSE › DSE 2011 › Q10
1 markMicroeconomics › Perfect competition › Market equilibrium and comparative staticsModerateabout 3 min

DSE 2011 Question 10: Perfect competition

The market for good XXX has the demand function D(p)=100−15pD(p)=100-15pD(p)=100−15p where ppp is the price of good XXX. There are ten price taking firms, each having a cost function c(q)=q2c(q)=q^{2}c(q)=q2, where qqq is the firm's own output. There is no new entry. Prices and costs are in terms of rupees per unit. The equilibrium price in this market is

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The market for good X has the demand function D(p)=100-15p where p is the price of good X. There are ten price taking firms, each having a cost function c(q)=q², where q is the firm's own output. There is no new entry. Prices and costs are in terms of rupees per unit. The equilibrium price in this market is (A) Rs. 20 (B) Rs. 15 (C) Rs. 10 (D) Rs. 5

Also written as: The market for good X has the demand function D(p)=100-15p where p is the price of good X. There are ten price taking firms, each having a cost function c(q)=q^2, where q is the firm's own output. There is no new entry. Prices and costs are in terms of rupees per unit. The equilibrium price in this market is

Perfect competition has come up 115 times in 7 exams since 2006.

What this question tests

This question is on Market equilibrium and comparative statics, part of Perfect competition in Microeconomics.

Finding equilibrium from demand and supply and tracing how it moves when either curve shifts.

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Question from the DSE 2011 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.