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In a perfectly competitive market, assume every firm faces the same short run total cost curve: TC= 2q^2 + 10q + 200. The market demand curve is :Qd = 800-8P. Given perfect competition, if this industry is in long run equillibrium:

1) Find the level of output produced by each firm

2) Find the market price of the output.

3) Find the total industry output adn the number of firms in the market.

4) How much economic profit does each firm in this market make?

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Mahe Alam
Mahe AlamLv10
30 Sep 2019

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Related questions

If a representative firm with the long-run total cost given by TC = 50+2q+2q^2 operates in a competitive industry where the short-run market demand and supply curves are given by Qd = 1,410 - 40P and Qs = -390 +20P, its long-run profit-maximizing level of output is:

Suppose that there are 1,000 firms in a perfectly competitive industry, each with a short-run total cost curve given by TC = 800 + 8Q + 0.1Q^2.

a. What is the profit-maximizing output for each firm at a market price of $20?

b. How much profit does each firm make at a market price of $20?

c. Explain whether the industry will expand or contract in the long run?

Suppose you are given the following information about a particular perfectly competitive industry:

QD= 6500-100P .....Market demand

QS= 1200P .....Market Supply

C(Q)=722+(Q2)/200 ......Firm's total cost function

Assume all firms in this perfectly competitive industry are identical.

a) Find the equillibrium price and the equilibrium quantity for the entire industry, the output supplied by the firm, and the profit of each firm.

b) Would you expect to see entry into or exit from this industry in the long run? Explain. What effect will entry or exit have on market equilibrium?

c) Suppose the long run total cost function is given by C(Q) = 6Q-3Q2+Q3. What will the price be in long run equilibrium in this industry? Is profit positive, negative or zero? Explain.

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