Each firm in a competitive market has a cost function of: Upper C equals 49 plus q squared , so its marginal cost function is MC equals 2 q. The market demand function is Upper Q equals 49 minus p. Determine the long-run equilibrium price, quantity per firm, market quantity, and number of firms. The output per firm is nothing. (round your answer to the nearest integer)

Question

Business

Lea Hanna

16 February, 06:59

Each firm in a competitive market has a cost function of: Upper C equals 49 plus q squared , so its marginal cost function is MC equals 2 q. The market demand function is Upper Q equals 49 minus p. Determine the long-run equilibrium price, quantity per firm, market quantity, and number of firms. The output per firm is nothing. (round your answer to the nearest integer)

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Answers (1)

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Roberto Vega · Answer 1

Output = 5

Explanation:

As per the data given in the question,

Output per firm:

Marginal cost = Average total cost

MC = ATC (Since in long run each type of firm is earning zero economic profit)

(49 + q^2) : q = 2q

49 + q^2 = 2q^2

49 = q^2

q = 7

Average total cost = (49 + 49) : 7

= 98 : 7

= 14

Hence, Price = min ATC = MR = 14

Market quantity (Q)

= 49 - 14

= 35

Number of firms

= Total quantity : Output per firm

= 35 : 7

= 5