Question

Suppose that the market for ice cream sandwiches is perfectly competitive. Firms that produce ice cream sandwiches are identical; their long-run cost functions are given by. Market demand is .

Answer 1

The long-run price is the minimum average total cost and it is found by equating the first differentiation of ATC equal to zero.

The price is $87.75

b)

Q=6000-P

P=87.75

Q=6000-87.75

Q=5912.25

the total industry output is 5912.25 units

c)

Number of firms = total industry output /one firm output =5912.25/1.5

=3941.5

The number of firms is 3941.5