What profit level will each firm earn in the short-run

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Each of 100 rms in a competitive market has a cost function of c(Q) = 72 + 2Q2, meaning each rm has a marginal cost of MC = 4Q. The market demand curve is QD = 600 5p.

a. Solve for the short-run equilibrium price and quantity (hint: rst, solve for an individual rm's supply curve, and then multiply the quantity by 100 to get the market supply curve).

b. What profit level will each rm earn in the short-run?

c. In the long-run, will there be entry or exit from the market? Explain. What number of rms will be active in the long run?

Reference no: EM13209452

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