The next 5 questions relate to the following scenario: In a perfectly competitiv

Question

The next 5 questions relate to the following scenario: In a perfectly competitive market, market demand is QD-380-2P and market supply is Qs =2P-20 Each firm has short-run MC-SQ and ATC = 2.5Q + (1000) (ATC s at minimum when Q-632). 4. How much output will each firm produce? a. 180 b. 10 c. 20 d. 100 What is the profit/loss for each firm in the short-run? a. $-7, 000 b. $900 c. $2, 500 d. $0 5. 6. How many firms are there in the industry in the short-run? a. 12 b. 5 c. 9 d. 20 What will the price be in long-run equilibrium? a. $31.62 b. $100 c. $6.32 d. $48.85 7. How many firms will there be in long-run equilibrium? a. 50.12 8. 2 b. 28.89

Explanation / Answer

In equilibrium, Qd = Qs

380-2P =2P-20

4P=400

P =100

Thus market supply

Q=2P-20

Q =200-20 =180

So the correct Answer is:- 180

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