Is the industry in long-run competitive equilibrium

Reference no: EM13238505

Assume that in a different competitive industry, there are 8 firms, each with a marginal cost equal to
MC = 20-10q +q^2

Average cost is minimized at q = 10 and AVC is minimized at q = 8 for each of these firms. Demand for the product is P = 100-QD

a. Is this industry in long-run competitive equilibrium?

b. A new trade policy will open this industry to foreign competition for the first time. The world price is $10 (i.e., there is an unlimited quantity available to consumers at $10 each). What will be the effect on the number of domestic firms operating in the short run? In the long run?

Reference no: EM13238505

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