A. Perfectly Competitive Market

Consider a market where 100 firms are in operation in the short run. Each firm's cost function is T C = 450 + 2q 2 . The market demand function is QD = 1200 5P.

1. Calculate short-run market equilibrium.

2. Will there be entry or exit in the long run?

3. Calculate the long-run competitive equilibriumthe equilibrium price, total market demand, and how many firms in operation in the long run equilibrium ( 225 = 15).