Bucolic Farms supplies milk to B&Q Food Stores. Bucolic has estimated the following total cost function for its product.

TC = 100 +12Q + 0.06Q2 , where Q is measured in hundreds of gallons.

a. What are the ATC, AVC, MC, and TFC equations?

b. What is the shut-down quantity and price?

c. What is the break-even quantity and price?

d. Suppose that there are 5,000 nearly identical milk producers in this industry. What is the market supply curve?

e. Suppose that the market demand function is Q = − P 

 



 

660 000 196 000 12

,

,

.

What are the market equilibrium price and quantity?

f. Determine Bucolic’s profit.

g. Assuming that there is no change in demand or costs conditions, how many firms are there if this industry is in long-run competitive equilibrium?