Consider a perfectly competitive industry. Market demand is P=500-2Q and all firms are identical. Suppose a representative firm’s long run average cost of production, which can be modeled as LRAC = 50-4q+q2, results in a minimum efficient scale level of output equal to 2 (that is, where LRAC is at its minimum).
a. Find the market’s long-run equilibrium price.
b. Show that the firm's profit is zero at this price. c. If all firms are identical, then how many firms is competition in this market in the long run?