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3.Assume that in a different competitive industry, there are 8 firms, each with a marginal cost...

3.Assume that in a different competitive industry, there are 8 firms, each with a marginal cost equal toMC = 20-10q +q2Average cost is minimized at q = 10 and AVC is minimized at q = 8 for each of these firms. Demand for the product is QD= 100-P

a.Is this industry in long-run competitive equilibrium? Explain your answer.

b.A new trade policy will open this industry to foreign competition for the first time. The world price is $10 (i.e., there is an unlimited quantity available to consumers at $10 each). What will be the effect on the number of domestic firms operating in the short run? In the long run?

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