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(26pts) In the accounting sector, where you work, all firms have a long-run cost function given by C(q) = q2 + 256, but the firm
(26pts) In the accounting sector, where you work, all firms have a long-run cost function given by C(q) = q2 + 256, but the firm you run as an entrepreneur has a cost function C(q) = q2 + 144, where q is the number of cases a firm takes in a year. Assume the fixed costs are avoidable in the long run. Demand for accounting is given by Q = 800 - 10P. A. Find the long-run equilibrium price and quantity on the accounting market. (9pts) B. How many firms are on the market (including yours), and how many cases does your firm and each of the other firms take? (NB: at a given market price, you may or may not find it optimal to take on the same number of cases as the other firms.) (7pts) C. How much economic rent does your firm get? How much economic rent does each of the other firms make? (6pts) D. There is a job fair, in which the consulting industry tries to hire accountants. How much should they offer you in order to close your accounting firm and work for them? (4pts) [For 0.5 bonus point, enter below the demand for accounting when P = 10. Enter a quantity.]
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