Equate price and marginal cost to determine firms short run

Reference no: EM13396345

A raincoat producer has short-run cost function

C(q) = 50 +q+(1/10)*q^2

(a) Show the firm's marginal and average cost curves on a properly-labeled graph.

(b) If the price of a raincoat is $4, how much will the firm supply? Will it make a profit, a loss, or neither? (If a profit or a loss, calculate its size.)

(d) Equate price and marginal cost to find the firm's short run supply function q(p) and graph it on a well-labeled graph.

(e) If the market consists of 100 firms just like this one, find and graph the short-run industry supply curve.

(f) Suppose that this firm has constant returns to scale; what does this tell you about the shape of its LRAC curve? What about the firm's LR supply curve?

(g) Is the industry in long-run equilibrium? How do you know? If yes, explain why. If no, find the price associated with long-run equilibrium.

(h) In the long-run equilibrium, will there be more or fewer than the current 100 firms in the market? Explain.

Reference no: EM13396345

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