Answered: In the short run there are 400 firms in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

In the short run there are 400 firms in a perfectly competitive market, all with the same total cost function: SRTC = 2.5q2 + 5q + 40. Suppose the market demand curve is represented by P = 165 - 0.0875Q. The profit earned by each firm in the short run is

a. $0

b. -$40

c. -$50

d. $30

e. $75

Each firm in a perfectly competitive market has long-run total cost represented as LRTC = 100q2 - 10q + 100. The market demand is Q d = 2150-5P. At the long-run equilibrium price, how many firms are in the market?

a. 500

b. 1,000

c. 1,200

d. 2,000

e. 2,400

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