There are currently 5 identical firms in the perfectly competitive lock manufacturing industry. Each firm operates in the short run with a total fixed cost ofFand total variable cost of 2q², whereqis the number of locks produced by each firm. Part of each firm total cost is non-sunk and it is equal to 32. Each firm would just earn zero economic profit if the market price were 40 ((Note:The equilibrium price is not necessarily 40 when there are 10 firms in the market - you should use this information to compute the fixed cost)

The market demand for gadgets isQ^D= 180 2.5P, whereQ^Dis the amount purchased in the entire market.

a) (6pts.) How large are the total fixed costs for each firm? Show your work.

b)(5 pts. ) What would be the shutdown price for each firm in the short-run? Show your work.

c)(6 pts.) Draw a graph of the short-run supply for this firm. Label it clearly.

d)(10 pts.) What is the equilibrium price when there are 5 firms currently in the market (short-run equilibrium)? At this price, compute the firm's short-run profit.

e) (8 pts.)With the cost structure assumed for each firm in this problem, how many firms would be in the market in the long run? In a graph, show the long-run market equilibrium price and quantity.