Suppose there are 100 firms in a perfectly competitive industry.

Each firm has total cost function TC(q) = 0.25q2 + 20q + 16; and marginal cost: MC(q) = 0.5q + 20. The demand for the good in this market is given by the following function: Q = 2600 - 100P, where Q denotes market demand and P, the price.

a. What is the individual firm's supply curve in the short run (remember the shut-down condition)? Define the short run market supply curve.

b. What is the short run equilibrium price in this market? The equilibrium quantity? The profit of each firm?

c. Given your answers in (b) would you expect firms to enter or exit this industry in the long run? What are the long run equilibrium price, quantity, and number of firms in this industry?