Find the long-run equilibrium market price and quantity

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A perfectly competitive, constancy-cos industry has a market demand curve P=50-(1/7)Q.Each firm has a U-shaped long run average cost function with a minimum of $10.The efficient scale of production of these firms is 5units.

a.)What is the long-run equilibrium market price and quantity?

b.)What is the long-run number of firms in the industry?How much does each produce?What are their profits?

c.)Suppose that market demand drops so that the new demand curve is P=50-(1/7)Q.If short run marginal cost of firms is SMC=2q-5, what is the short-run equilibrium price and quantity in the market? What is the output of each firm in short-run?

d.)Now find the new long-run equilibrium price quantity.What is the new equilibrium number of firms?

Reference no: EM13392412

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