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Unformatted text preview: c. What is the short run supply equation of the firm? Graph the supply curve of the firm. d. Suppose the market demand is Q d = 1000 100P. If there are 100 firms, then what are the short-run equilibrium price and quantity? 3. (20pts) A perfectly competitive industry consists of a number of identical firms. Each firm has the following long-run marginal and average cost functions: LRMC(q) = 40 12q + q 2 LRAC(q) = 40 6q + (q 2 )/3 The market demand curve is given by Q d = 2200 100P. (a) In the long run equilibrium, how much would each firm produce? (b) What is the long-run equilibrium price? (c) How many firms will be operating in this equilibrium? (d) Plot two side-by-side graphs to illustrate the long run equilibrium; one should show a typical firm, the other should show the market....
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- Spring '11