A firm in a perfectly competitive market has a cost function
Question # 00688062
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Updated on: 05/19/2018 01:45 PM Due on: 05/19/2018
A firm in a perfectly competitive market has a cost function given by C(q)=2q2 + 1000. The market is characterized by free entry and exit. We are thus considering the long-term equilibrium in this market. At what output level is average cost minimized? What is the firm's individual supply function in a perfectly competitive market? Assume that all firms on this perfectly competitive market have the same cost function. What price do you expect on this market? What is the aggregate supply on this market if there are N firms? The demand on this market is given by D(p)=2000-p. What is the equilibrium number of firms and the total output in the long run?
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Solution: A firm in a perfectly competitive market has a cost function