Suppose there are 20 firms in a competitive market, that all face the following cost curve: C(q) = 2q^2 + 32
Market demand is given: Qd(p) = 400 - 15p a) solve for the short run market equilibrium (Q*, P*)?
b) Graphically depict the short-run equilibrium for the market and an individual firm. Calculate and label an individual firmìs output, qi, and profit. Label all curves, axes, and intercepts.
c) what do you expect to happen to this market in the long run?
d) solve for the long-run equilibrium (P*, q*i, and the number of firms, n). explain in words how the graph from part (b) will change?
e) Graph the Long-run market equilibrium. show how a price ceiling of $12 will affect the Market. Label and calculate the areas representing consumers' surplus, producers' surplus, and the change in total surplus (I.e. the deadweight loss).