The cost function for Lara's Scuba Diving Rentals isC(q) = 2.5q2+300and MC = 5q, where q represents the number of rentals per day, on average. Lara works in a perfectly competitive industry. The price per rental per day is$40.

a. Determine the profit maximizing number of rentals per day for Lara's firm. What is the profit maximizing condition to find q*?

b. Does Lara make a profit or a loss at this quantity? How much?

c. Should Lara continue to produce, or shut down in the short run? Explain.

e. What would losses be equal to, if Lara was shutting down and produced nothing in the short run?

f. Determine the long run equilibrium price, profit, and output in this competitive industry.