Determine the long-run number of firms in the industry

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Reference no: EM13317820

1. Assume that each firm in a perfectly competitive market faces the following long-run total cost function (LTC) and inverse demand function.

LTC = 2q - 2q2 + q3;

Inverse Demand: p = 1001 - Q,

where p is price, q is firm output, and Q is industry output. Determine the long-run equilibrium:

A. Graph the firm’s long-run average cost and show that it reaches a minimum where q =1.

B. Determine the long-run equilibrium price (p*) and the firm’s long-run equilibrium output (q*).

C. Determine the long-run industry output (Q*).

D. Determine the long-run number of firms in the industry (n*).

Reference no: EM13317820

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