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:

Variance

A measure of the dispersion representing the average of the squared differences from the mean in a data set.

Involuntary Reflex Responses

Automatic, rapid responses of the nervous system to a stimulus that do not require conscious thought, protecting the body from harm.

Group Mean

A statistical measure that represents the average value of data points within a specified set or group.

Average Reaction Time

The typical duration it takes for an individual to respond to a stimulus.