16. Suppose a representative firm in a perfectly competitive, constant-cost industry has a cost function TC
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16. Suppose a representative firm in a perfectly competitive, constant-cost industry has a cost function TC 4Q2 100Q 100.
a. What is the long-run equilibrium price for this industry?
b. If market demand is given by the function Q 1000 P, where P denotes price, how many firms will operate in this long-run equilibrium?
c. Suppose the government grants a lump-sum subsidy to each firm that manufactures the product. If this lump-sum subsidy equals 36, what would be the new long-run equilibrium price for the industry?
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