Consider a perfectly competitive market in the short run. Assume that market demand is P=100 - 4Q_D and market supply is P=Qs. Denoting firm level quantity by q, assume TC=50+4q+2q2 so that MC=4+4q.

a) What is the market equilibrium price and quantity?

b) How many firms are in the industry in the short run?

c) Do firms make a profit or loss in the short run, and how much are these profits/losses?

d) What is the equilibrium price in the long run? What will be equilibrium profit in the long run? How many firms will there be in the long run? Hint, for the last part of the question, assume that there can be fractional firms, if necessary - if the numbers of firms are in units of 10,000, for example, the answer will be fine. Moreover, assume the entry or exit in the industry will cause the supply curve to shift, while the demand curve does not shift. Therefore, industry output can be found by taking the long-run price and plugging it into the demand curve.

3. Consider a perfectly competitive market in the short run. Assume that market demand is P=l 4QD and market supply is P=Qs_ Denoting rm level quantity by q, assume TC=S+4q+2q2 so that MC=4+4q. a) 1What is the market equilibrium price and quantity? b) How many rms are in the industry in the short run? c) Do rms make a prot or loss in the short run, and ho'utr much are these protsu'losses'? d) 1|What is the equilibrium price in the long run?I 1What will be equilibrium prot in the long run?r How many rms will there be in the long run? Hint, for the last part of the question, assume that there can be fractional rms, if necessary if the numbers of rms are in umts of IUJJIJIJ, for example, the answer will be ne. Moreover, assume the entry or exit in the industry will cause the supply curve to shi, while the demand curve does not shi. Therefore, industry output can be found by taking the longntn price and plugging it into the demand curve