Consider a competitive industry in which each firm has the same production techn

Question

Consider a competitive industry in which each firm has the same production technology given by the production function q = J1/6 K1/6 L1/6, where J, K and L are three inputs and q is the amount of output. The unit price of J is $2, the unit price of K is $4, and the unit price of L is $1. Firms also incur quasi-fixed costs $216 for q > 0. Many firms could enter this industry in the long run, and firms are free to depart. All firms, both those in the industry and potential entrants, have the same technology and cost structure described above. Finally, assume demand is given by the demand function D(p) = 1440 -10p. Suppose that the industry is currently in the long run equilibrium and find the long run equilibrium. Give: equilibrium price, quantity, number of firms, output per firm, amount of factors used by each firm, profit per firm. The price of J has now become $4. In the short run, firms can vary the amount of L they input to production, but the levels of J and K are fixed and the number of firms is fixed. Describe the short-run equilibrium by giving: the equilibrium price, quantity, number of firms, output per firm, amount of factors used by each firm, profit per firm. Continue to assume the price of J is $4. In the medium run, all factors can be varied, but the number of firm is fixed. Describe the medium-run equilibrium by giving the equilibrium price, quantity, number of firms, output per firm, amount of factors used by each firm, profit per firm.

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Consider a competitive industry in which each firm has the same production techn

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