Calculate the price below which the firm will not produce

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Newsprint is produced in a perfectly competitive market. Each identical firm has a total variable cost STC(Q) = 36 + 10Q + Q2, with marginal cost SMC(Q) = 10 + 2Q. A firm's fixed cost is entirely nonsunk.

(a) Calculate the price below which the firm will not produce any output in the short run.

(b) Use a graph to illustrate a firm's supply curve.

(c) Assume that there are 14 identical firms in this industry. Currently, the market demand for newsprint is D(P ) = 360 6P . What is the short-run equilibrium price?

(d) Since the fixed cost is nonsunk, let us suppose that the long run total cost is also 36 + 10Q + Q : How much is the long-run equilibrium number of firms? (if you cannot find the exact number, at least give a qualitative answer by comparing it with the short-run number.)

Reference no: EM132488652

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