Consider the market for a particular type of financial service. Assume 1) all firms are identical...

Consider the market for a particular type of financial service. Assume 1) all firms are identical and 2) it is a perfectly competitive market. Further, assume the industry is a constant cost industry. Each firm’s total cost function is TC = 2q³ – 30q² + 150q.

(i) What is the long run equilibrium price and quantity for each firm?

(ii) The industry demand function is Qd=10000-10p. How many firms are there in the industry in the long run?

(iii) The demand has changed to Qd=6000-4p. How many firms are there in the industry now in the long run?

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Expert Solution

Rahul Sunny answered 10 months ago

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