3. Suppose a representative firm in a perfectly competitive industry has the following total cost of production in the short run: TC=Q^3-40Q^2+600Q. a. What will be the long run equilibrium quantity for the firm? What will be the long run equilibrium price in this industry? b. Let the industry demand be given by QD=12400-4P. How many firms will be active in the long-run equilibrium? c. Suppose the firm faces a positive demand shock that increases the industry demand to QD=16000-4P. Describe how the industry would respond and calculate the change in the number of firms.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter10: Prices, Output, And Strategy: Pure And Monopolistic Competition
Section: Chapter Questions
Problem 6E
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13. Suppose a representative firm in a perfectly competitive industry has the following total
cost of production in the short run: TC=Q^3-40Q^2+600Q.
a. What will be the long run equilibrium quantity for the firm? What will be the long
run equilibrium price in this industry?
b. Let the industry demand be given by QD=12400-4P. How many firms will be active
in the long-run equilibrium?
c. Suppose the firm faces a positive demand shock that increases the industry demand
to QD=16000-4P. Describe how the industry would respond and calculate the
change in the number of firms.

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