In the notebook industry aggregate demand is given by: Q-7600-200P
Where Q is the quantity of notebooks produced in the industry and P is the price per unit. There are a number of identical, perfectly competitive firms active in the industry with the following costs of production: AVC = 10+2q; FC = 50; MC =
10+4q; Where q is the number produced by the individual firm.
a. If the price of one notebook is currently $18, how many will each firm produce?
b. How many firms are currently operating in the industry? What is the equation of the short run industry supply curve?
C. What is the typical firm's economic profit/loss in the short run and in the long run? What will happen to the number of firms in the long run?
d. What is the long run equilibrium price, P, and the quantities Q. How many active firms, N, will there be in the long run?
e. Suppose the market is in a long run equilibrium and that Apple laptops, which serve as a substitute for notebooks, have suddenly contracted an incurable computer virus. How would you expect P, Q and N to change in the notebook industry in both the short and long run?