Firm supply and long-run equilibrium

Suppose a firm's long-run cost function is given by

C

(

q

) = 2 + 2

q

2

.

(a) Find the average and marginal cost functions.

(b) What is the minimum efficient scale? What is the minimum of the firm's av

erage cost

function?

(c) What is the shut-down price in the long-run, below which the firm w

ill choose not to

operate? Draw the firm's supply curve.

(d) If all firms in the industry have this cost function, and it is a cons

tant cost industry, what

will be the long-run equilibrium price?

(e) If market demand is given by

Q

= 30

2

P

, how much is produced in total by firms in the

market? How many firms will operate in this market in equilibrium?