Suppose that we have a perfectly competitive market with inverse market demand P = 1000-10Q and inverse market supply P = 250 +5Q. A. What is the equilibrium price and quantity in this market? B. Suppose the market is populated by identical firms whose total costs are TC = 100+4000 + 250² and whose marginal costs are MC = 400 + 50Q. How much output should each firm produce in the short run? C. What are each firm's profits? D. How many firms are there currently in the market? What do you think will happen to the number of firms in the long run?

Suppose that we have a perfectly competitive market with inverse market demand P = 1000-10Q and inverse market supply P = 250 +5Q. A. What is the equilibrium price and quantity in this market? B. Suppose the market is populated by identical firms whose total costs are TC = 100+4000 + 250² and whose marginal costs are MC = 400 + 50Q. How much output should each firm produce in the short run? C. What are each firm's profits? D. How many firms are there currently in the market? What do you think will happen to the number of firms in the long run?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter22: Perfect Competition

Section: Chapter Questions

Problem 4QP

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