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The Demand for the Output of a Multi-Firm Industry Is

Question 16

Multiple Choice

The demand for the output of a multi-firm industry is QT = 50 !2.5P. The total cost of production of an individual profit-maximizing firm in this industry is TC1= 4Q1. The reaction function of the remaining T !1 firms is:


A) QT !1 = 50 !2.5Q1.
B) QT !1 = 50 !0.5Q1
C) QT !1 = 16 !0.4Q1
D) QT !1 = 20 !0.5Q1
E) None of the above.

Correct Answer:

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