Problem
The market demand and supply curves in a perfectly competitive industry are given by: Qd = 30,000-600P and Qs = 200P-2000.
(a) Draw these functions on a diagram, and calculate the equilibrium price of output in this industry.
(b) Now assume that an additional firm is considering entering. This firm has a short-run MC curve defined by MC = 10+0.5Q, where Q is the firm's output. If this firm enters the industry and it knows the equilibrium price in the industry, what output should it produce?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.