In: Economics
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
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