Suppose there are 100 firms in an industry. Each has the following cost schedules:

Answer the questions below using the following demand curve for the industry.

a. What is the industry’s short-run supply schedule?

b. What will price and output be in the short run? How much will each firm produce? What will the profit be?

c. Allowing for entry and exit, what will the long-run supply curve be?

d. How much will each firm produce in the long run? How many firms will there be? What will their profit be?

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Output MC AVC AFC 1 3 3 9 2 2 2.50 4.50 3 1 2.00 3.00 4 2 2.00 2.25 5 3 2.20 1.80 6 4 2.50 1.50 7 5 2.86 1.29