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Equilibrium when only the old technology existed

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Suppose a highly competitive industry is composed of multiple identically sized firms. The existing "old" technology and input prices in the industry result in a firm reaching minimum efficient scale at 3,000 units with an average cost of AC=$900. Next, a "new" technology is developed which lowers min AC to AC = $600, but raises minimum efficient scale to 40,000 units.

If at a market price of $900 the total market quantity demanded is 255,000 units, then how many firms would be in this market at equilibrium when only the old technology existed?

Reference no: EM132401144

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