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Question: There are 40 identical firms in a perfectly competitive market. Each competitive firm has a cost function T C(q) = 32 + 2q 2 . The market demand is given by QD = 200 - 10p.
(a) Derive each competitive firm's short run supply function (the firm's optimal output q as a function of the market price p).
(b) What is the market supply function?
(c) What are the equilibrium price and quantity in the market? (d) (3 points) Determine whether or not each firm should operate in the long-run.
Finding the short run and long run profit maximizing price - quantity and number of firms in industry.
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In a monopolistically competitive marketplace, a firm has market power because it produces a differentiated product. This means that the firm earns positive economic profit in the long run.
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