Quiz 18 Perfect Comp.2

Quiz 18 Perfect Comp.2 - Q s . What is the market supply...

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Shomu Banerjee ECON 201 PERFECT COMPETITION CONT’D QUIZ Recall the perfectly competitive firm with a cost function given by C ( q ) = 72 + 2 q + 0.5 q 2 . In the previous quiz, you had calculated the firm’s supply curve to be q s ( P ) = P – 2 for P > 2 and zero otherwise. (a) There are 40 identical firms like the one above in this perfectly competitive market. Denote the quantity supplied on the market by
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Unformatted text preview: Q s . What is the market supply curve Q s ( P )? (b) If the market demand curve is given by Q d = 820 - 5 P , what is the market equilibrium price ( P *) and quantity ( Q *)? (c) The firm expects to be earning normal profits in the long run. What does the firm expect its long-run price to be? (d) Approximately how many firms will there be in this market after entry or exit?...
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