Question

Each firm in a competitive market has a cost function​ of: Upper C equals 49 plus q squared​, so its marginal cost function is MC equals 2 q. The market demand function is Upper Q equals 49 minus p. Determine the​ long-run equilibrium​ price, quantity per​ firm, market​ quantity, and number of firms. The output per firm is nothing. ​(round your answer to the nearest​ integer)

Answer 1

Output = 5

Explanation:

As per the data given in the question,

Output per firm :

Marginal cost = Average total cost

MC = ATC (Since in long run each type of firm is earning zero economic profit)

(49 + q^2) ÷ q = 2q

49 + q^2 = 2q^2

49 = q^2

q = 7

Average total cost = (49 + 49) ÷ 7

= 98 ÷ 7

= 14

Hence, Price = min ATC = MR = 14

Market quantity (Q)

= 49 - 14

= 35

Number of firms

= Total quantity ÷ Output per firm

= 35 ÷ 7

= 5