In: Economics
10. A perfectly competitive industry consists of many
identical firms, each with a long-run average total cost of LATC =
800 – 10Q + 0.1Q2 and long-run marginal cost of LMC = 800 – 20Q +
0.3Q2.
a. In long-run equilibrium, how much will each firm produce?
b. What is the long-run equilibrium price?
c. The industry's demand curve is QD = 40,000 – 70P. How many units
do consumers buy in long-run equilibrium? How many firms are in the
industry?
d. Suppose the industry's demand curve rises to QD = 40,600 – 70P.
How many new firms will enter this constant-cost industry in the
long run?