Suppose that each firm in a competitive industry has the following costs:

Total Cost:

TC=50+1/2q2

Marginal Cost:	MC=q

where q is an individual firm's quantity produced.

The market demand curve for this product is:

Demand

QD=1402P

where P is the price and Q is the total quantity of the good.

Each firm's fixed cost is $_______.

.

What is each firm's variable cost?

A.) 50+1/2q

B.) 1/2q²

C.) q

D.) 1/2q

Which of the following represents the equation for each firm's average total cost?

A.) 50/q + 1/2 q

B.) 50/q

C.) 1/2 q

D.) 50+ 1/2 q

Complete the following table by computing the marginal cost and average total cost for q from 5 to 15.

q	Marginal Cost	Average Total Cost
(Units)	(Dollars)	(Dollars)
5
6
7
8
9
10
11
12
13
14
15

The average total cost is at its minimum when the quantity each firm produces (q) equals __________.

.

Which of the following represents the equation for each firm's supply curve in the short run?

A.) 1/2q²

B.) 50q

C.) q

D.) 1201/2q²

In the long run, the firm will remain in the market and produce if ___________ .

Currently, there are 8 firms in the market.

In the short run, in which the number of firms is fixed, the equilibrium price is $_____ and the total quantity produced in the market is _______units. Each firm produces _______ units. (Hint: Total supply in the market equals the number of firms times the quantity supplied by each firm.)

In this equilibrium, each firm makes a profit of $______. (Note: Enter a negative number if the firm is incurring a loss.)

Firms have an incentive to enter/exit the market.

In the long run, with free entry and exit, the equilibrium price is $______, and the total quantity produced in the market is ______units. There are _____firms in the market, with each firm producing ______ units.