Suppose that the identical firms in a perfectly competitive market for cakes have long-run total cost functions given by TC(Q) = 10Q3 - 60Q2 + 100Q. Total cost is independent of the number of firms and total output in the market.
a. Describe the long-run supply curve for this industry.
b. Suppose market demand is QD = 1,000 - 40P. Solve for the long-run competitive equilibrium price, output per firm, and number of firms in the market.
c. Suppose demand decreases to QD = 800 - 40P. Solve for the long-run competitive equilibrium price, output per firm, and number of firms in the market.