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Firms in a particular industry each have total cost functions given by Q3 -6Q2+25Q+50. If this...

Firms in a particular industry each have total cost functions given by Q3 -6Q2+25Q+50.

If this is a competitive market ,what price is consistent with the long run equilibrium?

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Answer #1

In long run equilibrium there is no net profit, which means that the average total cost equals to the price. The total cost function is given. After some simple mathematics, we end up with price equals to 29.32 in order to be in long run equilibrium. The workings are shown below in the image.

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