Suppose that each firm in a competitive industry has the following costs: Totalcost:TC=50+1/2q2 Marginalcost:MC=q where q is an individual firm's quantity produced. The market demand curve for this product is Demand:QD=120−P where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market. 1. Give the equation for the market supply curve for the short run in which the number of firms is fixed. 2. What is the equilibrium price and quantity for this market in the short run? 3. In this equilibrium, how much does each firm produce? Calculate each firm's profit or loss. Is there incentive for firms to enter or exit?
Suppose that each firm in a competitive industry has the following costs:
where q is an individual firm's quantity produced. The market demand curve for this product is
where P is the
1. Give the equation for the market supply curve for the short run in which the number of firms is fixed.
2. What is the
3. In this equilibrium, how much does each firm produce? Calculate each firm's profit or loss. Is there incentive for firms to enter or exit?
4. In the long run with free entry and exit, what is the equilibrium price and quantity in this market?
5. In this long-run equilibrium, how much does each firm produce? How many firms are in the
market?
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