Q5.Table 1 shows the cost structure for a perfectly competitive firm of which there are a total of 100 in the industry

Table 1

Q

MC

ATC

60

30

43

70

35

41

80

40

40

90

45

41

100

50

43

110

55

46

120

60

50

and Table 2 shows the market demand and market supply schedules,

Table 2

Q

MC

ATC

30

12000

6000

35

11000

7000

40

10000

8000

45

9000

9000

50

8000

10000

55

7000

11000

60

6000

12000

a) What is the equilibrium price? At this price what quantity will the firm produce? (3 marks)

b) Is the perfectly competitive firm earning an economic profit or loss in the short-run? How much? (3 marks)

c) In the long run, what is the economic profit of the competitive firm? (3 marks)

d) What will the equilibrium price and quantity traded in the long run? (3 marks)

e) What quantity will the firm produce in the long-run? (3 marks)

f) How many firms will exist in the long-run? (3 marks)

g) Is the representative perfectly competitive firm achieving efficiency?(2 marks)