A perfectly competitive painted necktie industry has a large number of potential entrants. Each firm has an identical cost structure such that long-run average cost is minimized at an output of 20 units (Q(I)=20). The minimum average cost is $10 per unit. Total market demand is given by Q(d) = 1500-50P
1. What is the industry's long-run supply schedule?
2. What is the long-run equilibrium price (P*)? The total industry output (Q*)? The output of each firm Q*(I)? The number of firms/ The profits of each firms?
3. The short-run total cost curve associated with each firm's long-run equilibrium output is given by STC = 0.5(Q^2) - 10Q + 200 where SMC = q-10. Calculate the short run average. At what necktie output level does short-run average cost reach a minimum?
4. Calculate the short-run supply curve for each firm and the industry short-run supply curve