Question: 1. Assume the market for knit caps (i.e. Q = knit caps) is perfectly competitive and is estimated to be as follows: Market demand:

1. Assume the market for knit caps (i.e. Q = knit caps)

1. Assume the market for knit caps (i.e. Q = knit caps) is perfectly competitive and is estimated to be as follows: Market demand: QD = 16,000 3000P. Qs = 1000P. All sellers are identical and have the short run cost function: C 30-q+0.1q?. (Both Q and q are in thousands). a. Compute the firm profit maximizing quantity. b. Compute total revenue, total cost and profit for the firm. c. How many firms are in the market? d. Based on your answer to part (c), what can we expect to the number of firms in the long run? Why?

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