12.4 A perfectly competitive industry has a large number of potential entrants. Each firm has an identical cost structure such that long-run average cost is minimized at an output of 20 units (9, 20). The minimum average cost is $10 per unit. Total market demand is given by Q = 1,500-50P.

a. What is the industry's long-run supply schedule?

b. What is the long-run equilibrium price (P*)? The total industry output (Q*)? The output of each firm (g)? The number of firms? The profits of each firm?

c. The short-run total cost function associated with each firm's long-run equilibrium output is given by C(q)=0.5g2-10g+200. Calculate the short-run average and marginal cost function. At what output level does short- run average cost reach a minimum?

d. Calculate the short-run supply function for each firm and the industry short-run supply function.

c. Suppose now that the market demand function shifts upward to Q=2,000-50P. Using this new demand curve, answer part

(b) for the very short run when firms cannot change their outputs.

f. In the short run, use the industry short-run supply function to recalculate the answers to (b). g. What is the new long-run equilibrium for the industry?