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A firm sells its product in a perfectly competitive market where other firms charge a price of $110 per unit. The firm estimates its total
A firm sells its product in a perfectly competitive market where other firms charge a price of $110 per unit. The firm estimates its total costs asC(Q) = 70 + 14Q + 2Q2.
a. How much output should the firm produce in the short run?
units
b. What price should the firm charge in the short run?
$
c. What are the firm's short-run profits?
$
d. What adjustments should be anticipated in the long run?
multiple choice
- Entry will occur until economic profits shrink to zero.
- No firms will enter or exit at these profits.
- Exit will occur since these economic profits are too low.
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