The market for study desks is characterized by perfect competition. Firms and consumers are

price takers and in the long run there is free entry and exit of firms in this industry. All firms

are identical in terms of their technological capabilities. Thus the cost function as given below

for a representative firm can be assumed to be the cost function faced by each firm in the

industry. The total cost and marginal cost functions for the representative firm are given by

the following equations:

TC = 2qs^2+ 5qs + 50

MC = 4qs + 5

Suppose that the market demand is given by:

PD = 1025 - 2QD

Note: Q represents market values and q represents firm values. The two are different.

Question 1: At the new long-run equilibrium, how many firms will be in the industry?

Select one:

a.32

b.45

c.150

d.230

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Question2

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At the new long-run equilibrium, what will be the output of each representative firm in

the industry?

Select one:

a.4

b.5

c.3

d.2

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Question3

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Determine the equation for average total cost for the firm

Select one:

a.2qs + 2 + 50/qs

b.2qs + 5 + 50/qs

c.3qs + 5 + 50/qs

d.None of the above

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Determine the market quantity Q from the market demand curve, given

that we know the above calculated market price.

Select one:

a.23

b.504

c.34

d.89

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Question5

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In the long-run given this technological advance, how many firms will there be in the

industry?

Select one:

a.34

b.84

c.32

d.56