Suppose That the Perfectly Competitive Market for Coffee Beans Is

question 132

Essay

Suppose that the perfectly competitive market for coffee beans is made up of identical firms with long-run total cost functions given by TC = 2Q³ - 24Q² + 80Q, where Q is 100,000 pounds of coffee beans. Assume that these cost functions are independent of the number of firms in the market and that firms may enter or exit the market freely. Market demand is
.
a. Find the long-run equilibrium price, the quantity produced by each firm, and the number of firms in the industry.
b. Suppose that market demand increases to .
Solve for the new long-run competitive equilibrium and the number of firms in the industry under the new market demand condition.

---

Definitions:

Orbicularis Oris

A complex of muscles in the lips that encircles the mouth, involved in controlling movements of the mouth and lips.

Frontalis

A facial muscle that lifts the eyebrows and causes wrinkles on the forehead, being part of the occipitofrontalis muscle.

Zygomaticus

A muscle of the face, which draws the angle of the mouth superiorly and posteriorly to allow for smiling.

Temporalis

A muscle located on the side of the skull that is involved in chewing and jaw movement.