Electric vehicle (EV) companies need to buy a lot of batteries to produce their cars. In 2022, the total market demand for electric vehicle batteries is Q = 500 50 , where is measured in hundreds of thousands of batteries and is the price (in thousands of dollars) per EV battery. The current market supply is Q = 50P. Assume that all EV battery manufacturers produce identical batteries using the same technology, so that each battery manufacturer is a price taker. Each battery manufacturer has the same total cost function of TC(q) = 40 + 0.1q 2 , where q is in hundreds of thousands of batteries that the manufacturer produces and costs are measured in thousands of dollars. (With this total cost function marginal cost is MC(q) = 0.2q.) a. (2 points) What is the current market equilibrium price and quantity of EV batteries? P =

Q = b. (2 points) As functions of q, what are the total fixed cost, total variable cost, average total cost, and average variable cost for each EV battery manufacturer? TFC(q) =

TVC(q) = ATC(q) = AVC(q) =

c. (2 points) At the market price you found in part a, how many units will each manufacturer produce? What will their total profits be? (Write your answer in the box, and show your work below.) q = Profits = d. (2 points) In the long-run do you expect there to be entry or exit of producers in this market? (Or no change.) Explain in one sentence. Circle one: Entry, Exit, No change Explain: e. (2 points) What is the long-run equilibrium price in this market? ( assume that entry or exit does not change each firm's cost curves. You can also assume that the total cost curve given is also the total cost curve in the long run.) Remember, if you can't get a quantitative answer, describe qualitatively what will determine the long-run equilibrium price.) In long run, P =