Assume that a highly competitive market is describeed by the given supply and demand functions S = 3P = 90 and D =7910 - 5P. Assume as well that a representative firm has costs provided by C = 250 + 30q + 15q2
a) Obtain the market clearing price and quantity.
b) Under the supposition of profit and maximization, how much output must the representative firm generate?
c) Are profits positive? Must the firm stay in business? Show your calculations.
d) Find out the firms supply function?
e) How many firms are there in the industry?