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Suppose a representative firm in a perfectly competitive industry has the following total cost of production...

Suppose a representative firm in a perfectly competitive industry has the following total cost of
production in the short run: TC = Q3 - 60Q2 + 3000Q.

a) What will be the long run equilibrium quantity for the firm? What will be the long run
equilibrium price in this industry?

b) If the industry demand is given by QD = 12400 - 4P. how many firms will be active in the long-
run equilibrium?

c) Suppose the firm faces a positive demand shock that increases the industry demand to
QD = 15000 - 4P. What will be the new equilibrium number of firms in the market assuming that
the industry is a constant cost industry?

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