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Newsprint is produced in a perfectly competitive market. Each identical firm has a total variable cost VC= 40q + .5q^2 with an associated marginal cost curve MC = 40 + Q. A firms fixed cost is equal to 50.
A) Calculate the price below which the firm will not produce any output in the short run.
B) Assume there are 12 identical firms in this industry. Currently the market demand is Q^d = 360 - 2P. Compute the maximum firm's profit.
C) How many firms would be in the market at equib in which every firm's economic profits are zero?
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