The demand curve and supply curve for carpet cleaning in the local market are currently as follows: Demand: Q = 1,000 - 1OP Supply: Q = 640 + 2P The total cost function for the typical carpet cleaning company is: TC= 75 + 3q2 (so that FC=75, VC=3q2 and MC= 6q), where costs are measured in dollars and q is output per year. The market is perfectly competitive. First question how do I calculate the optimal output for the typical carpet cleaning firm in the short run and how many firms would operate in the market in the short run? Second, how would I compute operating profits and total profits for the typical firm in the short run. Based on the results so far, would you say that this market is at the long-run equilibrium?
The
Supply: Q = 640 + 2P
The total cost function for the typical carpet cleaning company is: TC= 75 + 3q2 (so that FC=75, VC=3q2 and MC= 6q), where costs are measured in dollars and q is output per year. The market is
First question how do I calculate the optimal output for the typical carpet cleaning firm in the short run and how many firms would operate in the market in the short run?
Second, how would I compute operating profits and total profits for the typical firm in the short run. Based on the results so far, would you say that this market is at the long-run equilibrium?
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