Question
2. Consider a competitive industry with several identical firms. The long run average cost of a firm producing q units of output is given by
2. Consider a competitive industry with several identical firms. The long run average
cost of a firm producing q units of output is given by
AC(q) = 20 + 3q2 12q.
Suppose factor costs are constant and there is free entry and exit. Suppose market
demand is
QD = 30 P.
where P denotes market price. Determine the number of firms in the industry
in the long run equilibrium.
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Foundations of Business
Authors: William M. Pride, Robert J. Hughes, Jack R. Kapoor
6th edition
1337386928, 9781337670975 , 978-1337386920
