For your Industry Analysis, you must complete each of the steps detailed below. When
completing the steps you must:
Type all equations using the `Insert Equation’ function (or equivalent).
Show all of your working.
Include a sufficient written description for the reader to follow your process.
Use appropriate notation and economic terminology.
Your audience for the industry analysis is other expert economists who may be required to
review your work. There is no page limit for the Industry Analysis.
3.1 Required steps
When completing the industry analysis you should assume that firms are engaged in
Cournot Competition.
Step 1: Using the information provided in the scenario, derive a total cost function for
a typical cardboard box manufacturer. Use QA to denote the quantity produced by the
typical firm.
TC(QA)=20QA+7,000,000
Step 2: Derive a profit function for the typical firm. Use X to denote the combined
production of the remaining three firms in the market.
πA=20QA-(QA^2+QAX)/500,000-7,000,000
Step 3: Find the profit of the typical firm if all firm’s in the market sell at the current
market price of $30.
π A=5,500,000
Step 4: Find the consumer surplus if all rm’s in the market sell at the current market
price of $30.
Step 5: Derive the typical rm’s best-response function.
Step 6: Find the equilibrium quantity and pro t for the typical firm.
Step 7: Find the equilibrium price and consumer surplus.
