1. (20%) Consider a competitive market whose demand is given by Q(P) = 250-10P. There are...

 

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1. (20%) Consider a competitive market whose demand is given by Q(P) = 250-10P. There are 100 identical firms in the market, each producing with a technology characterized by the total cost function, TC(q) = 9+9+q, where q denotes the quantity produced by each firm. a. (10%) How much profit does each firm make in the shorn-run equilibrium? b. (10%) In the long run, firms can freely enter or exit the market. How many firms are there in the market when it reaches the long-run equilibrium? 1. (20%) Consider a competitive market whose demand is given by Q(P) = 250-10P. There are 100 identical firms in the market, each producing with a technology characterized by the total cost function, TC(q) = 9+9+q, where q denotes the quantity produced by each firm. a. (10%) How much profit does each firm make in the shorn-run equilibrium? b. (10%) In the long run, firms can freely enter or exit the market. How many firms are there in the market when it reaches the long-run equilibrium?