the inverse market demand curve for a drug is given by p(y)=100-y, and the total

Question

the inverse market demand curve for a drug is given by p(y)=100-y, and the total cost function for any firm in the industry is given by tc(y)=5y
1)if the industry is perfectly competitive, what would be an eqauilibrium price?
the inverse market demand curve for a drug is given by p(y)=100-y, and the total cost function for any firm in the industry is given by tc(y)=5y
1)if the industry is perfectly competitive, what would be an eqauilibrium price?

1)if the industry is perfectly competitive, what would be an eqauilibrium price?

Explanation / Answer

In a perfectly competitive industry: Profit = 0

Profit = Total revenue - Total cost

TR = (100 - y) x y

TC = 5y

Both are equal when y = 95

Price = 100 - 95 = 5

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