Each Firm in a Perfectly Competitive Market Has Long Run

question 18

Multiple Choice

Each firm in a perfectly competitive market has long run average cost represented as AC(q) = 100q- 10+100/q. Long run marginal cost is MC=200q-10. The market demand is Q^d = 2150-5P. 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:

Project Cash Flow

The net amount of cash and cash-equivalents being transferred into and out of a project, reflecting its operational activity and financial health.

Opportunity Costs

The cost of foregoing the next best alternative when making a decision.

Cash Inflows

This term refers to the money coming into a business from its operational, financing, and investing activities.

Assets

Resources owned or controlled by a business, entity, or individual, with future economic value that can be measured and expressed in financial terms.