There are 6,480 identical firms in the widget industry each of which has a fixed cost that isavoidable in the long run,F=960,F=960,and their technology is given byq=K^3/10 L^1/5.q=K ^3/10 L^1/5.Initially the input prices arew=6andv=9. The market demand they face isQD(P)=130,60650P.

(a) Find the long run equilibrium (no entry, no exit, all factor of production variable)

P=P=

Q=Q=

q=q=

Always use fractions above

== two decimalaccuracy OK for this one

(b) Now suppose the price of capital changes tov=36v=36and thewage rate changestow=24.w=24.Find the equilibrium in the very short run.

P=P=

Q=Q=

q=q=

Always use fractions above

== two decimalaccuracy OK for this one

(c) Eventually the industry will reach the very long run equilibrium (entry and exit allowed, all factors of production variable). Find the very long run equilibrium (assuming that individual firm costs do not change with entry or exit.)

P=P=

Q=Q=

q=q=

n=n= Please do not worry if this does not work out be be exactly an integer.

Always use fractions above