The next 5 questions relate to the following scenario: In a perfectly competitiv

Question

The next 5 questions relate to the following scenario: In a perfectly competitive market, market demand is QD= 380-2P and market supply is Q,2P-20. Each imhas short-runMC-SQ and ATC-25Q + (100Q) (ATC is at minimum when Q = 6.32), 4. How much output will each firm produce? a. 180 b. 10 d. 100 5. What is the profit/loss for each firm in the short-run? a. $-7, 000 b. $900 c. $2. 500 How many firms are there in the industry in the short-run? a. 12 b. 5 6. d. 20 What will the price be in long-run equilibrium? a. $31.62 b. $100 7. d. $48.85 How many firms will there be in long-run equilibrium? a. 50.12 b. 28.89 8. c. 107.27 d. 180 erage-total-cost curves often U

Explanation / Answer

6) 9 is the correct answer.

Qd=Qs for equilibrium market output

380-2P=2P-20

P=100

Q= 380-2(100)= 180

For individual firm's output MC=P

5Q=100

Q=20

Number of firms= 180/20= 9

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