Determining the Rent in a Market with Restricted Entry Suppose all firms in a constant cost industry have identical costs of C(q)=5q2+6q+20. The market demand is QD=256 2p. (3) Find the long-run equilibrium: (1*, q*, p*, and N*. (b) How much consumer and producer occurs? Answers Determining the Rent in a Market with Restricted Entry (a) LR supply: p=pBE. AC=5q+6+20/q, MC=10q+6. Set MC=AC-> q=2 and so pBE=26. Equilibrium p*=26, Q*=256-2(26)=204, q*=2, and N*=204/2=102. (b) PS=0 as the LR supply is flat (note we are assuming the 20 is a variable cost in the LR because the firms can exit the industry). CS=.5(128-26)204=10404