Consider a competitive industry with several identical firms. The long run average cost of a firm producing q units of output is given by AC(q) = 10 − 6q + q 2 . Suppose factor costs are constant and there is free entry and exit. Suppose market demand is Q D(P) = 31 − P. where P denotes market price. Determine the number of firms in the industry in the long run equilibrium.

Consider a competitive industry with several identical firms. The long run average cost of a firm producing q units of output is given by AC(q) = 10 − 6q + q 2 . Suppose factor costs are constant and there is free entry and exit. Suppose market demand is Q D(P) = 31 − P. where P denotes market price. Determine the number of firms in the industry in the long run equilibrium.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter7: Perefect Competition

Section: Chapter Questions

Problem 17SQ

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