The following table provides quantity supplied (QS) and quantity demanded (QD) at various prices in the perfectly competitive packaged meat market:

Price(per lb.) QS(In millions of lb) QD(In millions of lb)

$1.00 10 100

$1.25 20 85

$1.50 35 70

$1.75 60 60

$2.00 80 50

$2.25 105 40

Assume that each company in the packaging meat industry has the following cost structure:

Pounds Total costs

60,000 $106,000

61,000 $107,000

62,000 $108,000

63,000 $110,000

a) What is the level of output that maximizes profit (profit-maximizing output level) for a typical company (Hint: get the equilibrium price), then calculate the marginal cost (MC) for each change in output, and calculate the marginal cost (MR) for any change in output)

b) Is this market in long-run equilibrium? Why or why not? (Hint: Calculate the average total cost of ATC.)

c) What will happen to the number of companies in the packaging meat industry in the long run? Why?