Market demand is given as Q_D= 200 - 3P.Market supply is given as Q_S= 2P + 100.Each identical firm has MC = 0.5Q and ATC = 0.25Q.What is each firm's profit

Question

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Each firm's profit can be calculated by first finding the equilibrium price and quantity in the market: 200 - 3P = 2P + 100 5P = 100 P = 20 Q_D = Q_S 200 - 3P = 2P + 100 3P = 100 Q = 50 Therefore, each firm produces Q/2 = 25 units. Total revenue for each firm is: TR = PQ = 20(25) = 500 Total cost for each firm is: TC = ATCQ = (0.25)(25^2) = 156.25 Therefore, each firm's profit is: π = TR - TC = 500 - 156.25 = 343.75 However, since the choices only give integer options, the closest choice is C, which is 50.

Market Demand Is Given as QD = 200 - 3P

Market Demand Is Given as Q_D= 200 - 3P