Each Firm in a Perfectly Competitive Market Has Long Run $A C ( q ) =$

question 80

Multiple Choice

Each firm in a perfectly competitive market has long run average cost represented as $A C ( q ) =$ $100 q - 10 + 100 / q$ . Long run marginal cost is $M C = 200 q - 10$ . The market demand is $Q ^ { d } = 2150 - 5 P$ . Find the long run equilibrium output per firm, $q ^ { * }$ , the long run equilibrium price, $P ^ { * }$ , and the number of firms in the industry, $n ^ { * }$ .

• A) \(q ^ { * } = 1 ; P ^ { * } = 190 ; n ^ { * } = 1200\)
• B) \(q ^ { * } = 2 ; P ^ { * } = 240 ; n ^ { * } = 1200\)
• C) \(q ^ { * } = 50 ; P ^ { * } = 15 ; n ^ { * } = 200\)
• D) \(q ^ { * } = 100 ; P ^ { * } = 9991 ; n ^ { * } = 500\)

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Definitions:

Nirvana

In Buddhism, it refers to an exalted condition where there is an absence of pain, craving, or self-identity, and the individual is liberated from karma's influence and the continual cycle of mortality and rebirth.

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Tantalus

A figure in Greek mythology who was punished in the afterlife by being made to stand in water that receded when he tried to drink and under a tree whose fruit always eluded his grasp.

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