12.9 Suppose that the market demand for a product is given by QD A & BP....

12.9 Suppose that the market demand for a product is given by QD ¼ A & BP. Suppose also that the typical firm’s cost function is given by C(q) ¼ k þ aq þ bq2

.

a. Compute the long-run equilibrium output and price for the typical firm in this market.

b. Calculate the equilibrium number of firms in this market as a function of all the parameters in this problem.

c. Describe how changes in the demand parameters A and B affect the equilibrium number of firms in this market. Explain your results intuitively.

d. Describe how the parameters of the typical firm’s cost function affect the long-run equilibrium number of firms in this example. Explain your results intuitively