What is the equilibrium price and quantity

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Reference no: EM132198006

Question: Suppose that the demand for books is given by D (p) = A - p. The cost for all firms is C (y) = wy^2 + f, where f is a fixed set-up cost. Assume that the industry is perfectly competitive.

The equationsof part b are : y = (nP) / (2w)

And P = (2AW) / (2W+n)

what is the equilibrium price and quantity? Firm's supply and profit? Graph this competitive equilibrium.

(d) Is the equilibrium you found in part (c) a short-run or long-run equilibrium? Why? If the industry is not in long-run equilibrium, explain the adjustment process that will occur.

(e) For the parameter values given in part (c), find the long-run competitive equilibrium. What is the long-run equilibrium number of firms?

(f) Suppose that the market of books in now monopolized. Given the parameter values from part (c), what is the profit-maximizing price and quantity? What is the monopoly profit?

Reference no: EM132198006

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