Assume an agricultural commodity market is perfectly competitive. The industry demand is Q = 200000 1000P, where Q is bushels of the crop. The total cost of a typical firm is TC = 1,000 + 50Q + 0.025Q². Suppose initially there are 100 farmers in the market.

	A	B	C	D	E	F
1	Short-Run Equilibrium In a Perfectly Competitive Market Industry
2
3
4	Price	Number of Firms	Supply	Demand	D - S	Profit
5	150	100	20000	50000	30000	1800000
6
7	QF	MC	Cost	AC	Mprofit	Profit
8	200	60	12000	60	90	18000

Questions

1) Find the short-run equilibrium price and quantity of bushels of the crop and find the long-run equilibrium number of firms, price and quantity of bushels of food.

2) Are firms making a profit? What will happen in the long-run?

3) Create a separate graph (Like the one above) of a representative firms short-run marginal revenue curve, the marginal cost curve, and average cost curve. Graph from Q=0 to Q=2000 in increments of 10 to Q=100 and increments of 100 to Q = 500 and increments of 500 after to get a nice looking graph. Start average cost after Q=0. Identify the profit maximizing quantity, profit, and calculate the profit in the graph

4) Thoroughly explain the difference between the number of firms, the quantity per firm, the total quantity supplied, the price, and profits between parts (A) and (C)?

5) Calculate the change in consumer surplus between parts (A) and (C). Use this calculation to thoroughly explain whether or not competition is good for consumers.