The following market demand and rm cost condi-

tions describe a perfectly competitive industry:

p = 1000 - 0.001Q

TC(q) = 20q - 0.2q² + 0.001q³

(a) Find the rms short-run supply function. (1)

(b) Explain the firm's shutdown rule. (2)

(c) Suppose we are on the short-run and the number of rms is 500. Determine the equilibrium price (p), market output (Q), and firm output (q). Briefly explain whether there will be

entry or exit in the long run. (2)

(d) Determine the long-run equilibrium price (p),market output (Q), rm output (q) and num-

ber of (identical) rms. (2)