The Lawn-mowing business in West Pennsylvania, is a competitive industry. All Lawnmower operators have the cost...

The Lawn-mowing business in West Pennsylvania, is a competitive industry. All Lawnmower operators have the cost function

C=2Q^(2)+18

, where Q is the number of lawns cleared. Demand for Lawn-mowing in the area is given by Qd = 192 - P. The long-run equilibrium number of firms in this industry is? Pick a choice from the following and provide a step-by-step solution

A. 58

B. 29

C. 60

D. 30

E. 75

Solutions

Expert Solution

answer is C

TC=2q²+18
QD=192-P

the long run price = AC at miniumum point
AC= 2q²+18 /Q
=2q+18/Q
minimize AC
▲Ac/ ▲Q= ▲2q+18/q *1/q
= -2+18/q2=0
= 18/q2=2
=18=2q²
Q=3

P= AC
=2q²+18/q
=2(3)²+18/3

=(2*9+18)/3
=12
QD= 192- P
= 192- 12
= 180
total no of firm = 180 / 3 = 60 firms

Rahul Sunny answered 1 year ago

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