1.A perfectly competitive industry has a large number of potential entrants. Each rm has an identical cost structure such that long-run average cost is minimized at an output of 20 units (qi = 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 rm ( q*) ? The number of rms? The prots of each rm? The short-run total cost function associated with each rm's long-run equilibrium output is given by C(q)=0:5q² - 10q + 200. Calculate the short-run average and marginal cost function. At what output level does shortrun average cost reach a minimum?

c.Calculate the short-run supply function for each rm and the industry short-run supply function.

d.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 rms cannot change their outputs.

e.In the short run, use the industry short-run supply function to recalculate the answers to (b).

f.What is the new long-run equilibrium for the industry