Consider a monopolistically competitive firm in the short-run. The residual demand curve for the firm is given as P(q) = 618-19 and the cost function given as C(q) = 19². + 2q +3042. In the short-run, this firm produces 154 units and earns profits equal to 44390. Since the profits are positive and there are no entry barriers in a monopolistically competitive market, we know that new firms will enter this market. Assuming the above firm remains in the market in the long-run, the entrance of new firms will shift the above firm's residual demand curve to the left until its profits equal zero. Using the two conditions that must hold in the long-run of this market, determine the intercept of the above firm's residual demand curve in the long-run equilibrium, the long-run quantity, price, and economic profits. Long-run quantity: 39. (You should find a whole number for this answer.) Long-run intercept: 158. (You should find a whole number for this answer.) Long-run price: 119. (You should find a whole number for this answer.) Long-run profits: 0. (You should find a whole number for this answer.)
Consider a monopolistically competitive firm in the short-run. The residual demand curve for the firm is given as P(q) = 618-19 and the cost function given as C(q) = 19². + 2q +3042. In the short-run, this firm produces 154 units and earns profits equal to 44390. Since the profits are positive and there are no entry barriers in a monopolistically competitive market, we know that new firms will enter this market. Assuming the above firm remains in the market in the long-run, the entrance of new firms will shift the above firm's residual demand curve to the left until its profits equal zero. Using the two conditions that must hold in the long-run of this market, determine the intercept of the above firm's residual demand curve in the long-run equilibrium, the long-run quantity, price, and economic profits. Long-run quantity: 39. (You should find a whole number for this answer.) Long-run intercept: 158. (You should find a whole number for this answer.) Long-run price: 119. (You should find a whole number for this answer.) Long-run profits: 0. (You should find a whole number for this answer.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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PLEASE DON'T POST IF YOU DONT HAVE THE ANSWERS WRITTEN BELOW!!!! PLEASE PROVIDE A SOLUTION. THE CORRECT ANSWERS ARE:
- Long-run quantity = 39
- Long-run intercept = 158
- Long-run price = 119
- Long-run profits = 0
Transcribed Image Text:Consider a monopolistically competitive firm in the short-run. The residual demand curve for the firm is given as
P(q) = 618 - 19 and the cost function given as C(q) = 1q² + 2q +3042. In the short-run, this firm produces 154 units and earns profits equal to
44390.
Since the profits are positive and there are no entry barriers in a monopolistically competitive market, we know that new firms will enter this
market. Assuming the above firm remains in the market in the long-run, the entrance of new firms will shift the above firm's residual demand
curve to the left until its profits equal zero.
Using the two conditions that must hold in the long-run of this market, determine the intercept of the above firm's residual demand curve in
the long-run equilibrium, the long-run quantity, price, and economic profits.
Long-run quantity: 39. (You should find a whole number for this answer.)
Long-run intercept: 158. (You should find a whole number for this answer.)
Long-run price: 119. (You should find a whole number for this answer.)
Long-run profits: 0. (You should find a whole number for this answer.)
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