Answer to Question #2718 in Microeconomics for aryana

Question #2718

Consider a free-entry, perfectly competitive industry with identical firms. The
demand curve is q=600-3p. The cost curve of each firm is given by c(q)=450+1/2q2
where q is the output of the individual firm. Assume this is a
constant cost industry.
a) Assume firms are operating in the long run. Find the
i. price of the good
ii. amount produced by the industry as a whole
iii. number of firms in the market. (5 marks for i-iii)
b) Now suppose there is an increase in demand such that the new demand
curve is given by q=990-3p. What is the output response of the
industry in the short run?

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