1. (25 points) The market for study desks is characterized by perfect competition. Firms and consumers are price takers and in the long run there is free entry and exit of firms in this industry. All firms are identical in terms of their technological capabilities. Thus the cost function as given below for a representative firm can be assumed to be the cost function faced by each firm in the industry. The total cost and marginal cost functions for the representative firm are given by the following equations: TC 24 +5q+50 The market demand is given by: Po1025-20 Note: Q represents market quantity and q represents an individual firm's output level. (c) When this industry is in long-run equilibrium, how many firms are in the industry? (firms are identically sized).

1. (25 points) The market for study desks is characterized by perfect competition. Firms and consumers are price takers and in the long run there is free entry and exit of firms in this industry. All firms are identical in terms of their technological capabilities. Thus the cost function as given below for a representative firm can be assumed to be the cost function faced by each firm in the industry. The total cost and marginal cost functions for the representative firm are given by the following equations: TC 24 +5q+50 The market demand is given by: Po1025-20 Note: Q represents market quantity and q represents an individual firm's output level. (c) When this industry is in long-run equilibrium, how many firms are in the industry? (firms are identically sized).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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