Question

4) A perfectly competitive market is characterized by every firm having the following cost structure: C = 100 + q². In long-run equilibrium, what is the equilibrium quantity of output (Q)?

The inverse market demand is P = 1,020 - Q.

Question 4 options:

	Q = 1,000
	Q = 200
	Q = 500
	Q = 800

5) A perfectly competitive market is characterized by every firm having the following cost structure: C = 100 + q². In long-run equilibrium, how many firms are in the market?

Question 5 options:

	100
	50
	250
	20

Answer 1

In Q.4 under the perfectly competitive condition in the long run equilibrium MC(q)=AC(q)=P. So we can find Q* (equilibrium market quantity) and q* (individual firm quantity).

In Q.5 to find the number of firms (n), n=Q*/q*.