Suppose that you are given the following information about a particular industry:
QD = 6500 - 100P Market demand
QS = 1200P Market supply
2q C(q) = 722 + Each firm's total cost function
200 2q M C(q) = Each firm's marginal cost function 200
a. Find the equilibrium price, the equilibrium quantity, the output supplied by the firm, and the profit of each firm.
b. Would you expect to see entry or exit from this industry in the long run? Explain. What effect will entry or exit have on market equilibrium?
c. What is the lowest price at which each firm would sell its output in the long run? Is profit positive, negative, or zero at this price? Explain.
d. What is the lowest price at which each firm would sell its output in the short run? Is profit positive, negative, or zero at this price? Explain.