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Suppose a representative firm in a perfectly competitive, constant cost industry has a cost function

TC=4Q2+100Q+100

a) What is the long-run equilibrium price for this industry?

b) If market demand is given by the functionQ=1000?P, where P denotes price, how many firms will operate in this long-run equilibrium?

c) Suppose the government grants a lump-sum subsidy to each firm that manufactures the product. If this lump-sum subsidy equals $36/firm, what would be the new long-run equilibrium pricefor the industry?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9473227

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