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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?
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