# A perfectly competitive industry is characterized by the cost function for individual firms: TC...

## Question:

A perfectly competitive industry is characterized by the cost function for individual firms: {eq}\displaystyle TC (q) = 0.01 q^2 + 100 {/eq} and by demand function: {eq}\displaystyle D(p) = 10, 000 - 100 p {/eq}. Compute the long-run equilibrium price, quantity, and the number of firms in the market.

(Hint: Competition drives down the price to the minimum point on the average cost curve which is characterized by {eq}AC(q) = MC(q) {/eq}. Compute the long-run equilibrium quantity {eq}q* {/eq} using this equality. Once you have {eq}q* {/eq}, calculate {eq}p* {/eq} by using the competitive firm's profit maximization condition {eq}p = MC(q) {/eq}. Then get the number of firms using the demand equation.)

## Perfect Competition

Perfect Competition is defined as a market structure where there are many sellers and buyers of the commodity and the service. In such a market structure, the profit earned by the producers is considered to be normal profit.

## Answer and Explanation: 1

Become a Study.com member to unlock this answer! Create your account

View this answerThe long term equilibrium is calculated by the equilibrium of average cost and the marginal cost

The marginal cost is calculated from the total cost...

See full answer below.

#### Ask a question

Our experts can answer your tough homework and study questions.

Ask a question Ask a question#### Search Answers

#### Learn more about this topic:

from

Chapter 3 / Lesson 12What is marginal cost? Learn how to calculate marginal cost with the marginal cost formula. See the definition, behavior, and marginal cost examples.

#### Related to this Question

- A competitive industry currently consists of 50 identical firms. An individual firm's total cost function is given by TC = 0.5 q^2 + 200 and its marginal cost MC = q, where q is the quantity supplied by the firm. Market demand is given by Q = 4000 - 5 P,
- Suppose we have a perfectly competitive market where at the equilibrium price the total market demand is 300 units. Each individual firm in the market has a cost function C(Q) = 50 -2Q + 1.1Q^2. Determine the number of firms that this market can support i
- Industry X has a market demand curve given by the equation P = 100 - Q/100, where P is the market price, and Q is industry-wide output.100 perfectly competitive firms currently operate in industry X. Each of these firms has a total cost function given by
- Suppose that each firm in a competitive industry has the following costs: Total Cost: TC = 50 + \frac{1}{2}q^2 Marginal Cost: MC = q where q is an individual firm's quantity produced. The market demand curve for this product is: Q_D = 120 - P where P is t
- There are two identical firms (with cost functions C1(Q) = C2(Q) = Q which operate on the market with demand P = 10 - Q, where Q is total quantity on the market, Q = Q1 + Q2 A. Find the equilibrium Q and P if this industry would be perfectly competitive
- An industry has the demand curve D(p)= 28-p. Each of a very large number of potential firms has the long-run cost function: C(y)= y^2 + y + 9 if y>0, 0 if y=0 a. Find the long-run competitive equilibrium price b. Find output per operating firm c. Find
- Suppose that each firm has the long-run cost function c(y) = y^2 + 9 for y greater than 0 and c(0) = 0. The industry demand is given by D(p) = 51 - p. The equilibrium price in the long-run equilibrium of the industry in a perfectly competitive market is:
- Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + frac{1}{2}q^2 Marginal Cost: MC = q where q is an individual firm's quantity produced. The market demand curve for this product is Demand: Q_D = 120 - P where
- A duopoly faces the demand curve D(p) = 30 - 0.5p. Both firms in an industry have a total cost function given by C(q) = 4q. Suppose that Firm 1 is a Stackelberg leader in choosing its quantity first. Firm 1's profit function can be written as what?
- A perfectly competitive market has 17 firms. The 17 firms have a marginal cost of Market demand is Calculate the market price. Round your answer to one decimal place.
- Suppose that each firm in a competitive industry has the following costs: Total Cost: TC = 50 + 1/2q^2 Marginal Cost: MC = q, where q is an individual firm's quantity produced. The market demand curve for this product is: Demand: QD = 140 - 2P, where P
- Suppose that each firm in a competitive industry has the following costs: Total Cost: TC = 50 + 1/2q^2 Marginal Cost: MC = q, where q is an individual firm's quantity produced. The market demand curve for this product is: Demand QD = 140 - 2P, where P i
- Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q^2 Marginal cost: MC = q where q is an individual firm's quantity produced. The market demand curve for this product is Demand: QD = 120 - P where P is
- Suppose that each firm in a competitive industry has the following costs: Total Cost: TC = 50 + 1/2q^2 Marginal Cost: MC = q, where q is an individual firm's quantity produced. The market demand curve for this product is: QD = 140 - 2P, where P is the p
- A firm in a perfectly competitive industry has the following total cost function: TC = 4,000 + 350Q -15Q^2 + Q^3 The market demand and supply functions are respectively given by: QD = -400P + 320,000
- A firm has a demand function P = 200 - 5Q and a cost function: AC=MC=10 a. What price, quantity, and corresponding profit occur if this a purely competitive market? b. Determine the optimal price, q
- The demand in the market for widgets is given by P = 120 - Q. Firms operating in this market do not have any fixed cost but have a constant marginal cost of $10. a. Assuming this market is perfectly competitive; calculate the equilibrium quantity and pri
- A firm operates in a perfectly competitive industry. Suppose it has a short run total cost function given by TC = 20000 + 0.01q^2. If the market price is 62. What is the firm's profit-maximizing quantity?
- Suppose that each firm in a competitive industry has the following costs: Total Cost: TC=50 + 1/2 q^2 Marginal Cost: MC=q Where q is an individual firm's quantity produced. The market demand curve for
- In a perfectly competitive industry, each producer has a long-run total cost function given by LTC = q3 - 24q2 + 200q, where q denotes the output of the individual firm. The market demand for the product is Q = 1480 - 5P, where Q and P denote the market o
- For the Demand function P = 100 - Q when facing a constant marginal cost of 25, determine the perfectly competitive, monopolist and Cournot Duopoly price and quantity.
- 1. A firm has a demand function P = 100 - 5Q and a cost function: AC=MC=20 a. What price, quantity, and profit occur if this a purely competitive market? b. Determine the optimal price, quantity, and economic profit for the firm if it is a pure monopol
- Given an aggregate demand function Q(p)=100-2p and a cost function for each firm of C(q)=5q^2+2. Suppose there are 80 firms. Solve for the price, quantity, and profits for each individual firm, given
- A market (or industry) demand curve is described by Q = 600 - 0.5P. The monopolist firm's cost function is TC = 8,550 + 20Q. A) Find the profit-maximizing quantity and price. B) If the monopoly is dissolved and then the market becomes perfectly competitiv
- A market or industry demand curve is described by Q 50 0.5 P. The firm s cost function is TC 10 + 2 Q a. Find the profit maximizing quantity and price. b. If the industry is regulated in a way that re
- Firm total cost function: C = 100 + 2Q2 Firm marginal cost function: MC = 4Q Industry demand curve: P = 90 - 2Q Industry marginal revenue curve: MR = 90 - 4Q a. If there is only one firm in the industry, find the monopoly price, quantity, and level of pro
- A firm operates in a perfectly competitive industry. Suppose it has a short run total cost function given by TC = 90000 + 0.01q^2. If the market price is 62, what is the firm's profit maximizing quantity?
- Given an aggregate demand function Q (p) = 100 - 2 p and a cost function for each firm of C (q) = 5 q^2 + 2. Suppose there are 80 firms. Solve for the price, quantity, and profits for each individual firm, given that the number of firms is fixed.
- A firm operates in a perfectly competitive industry. Suppose it has a short-run total cost function given by TC = 42000 + 0.001q2. If the market price is 15, what is the firm's profit-maximizing quantity? (Answers must be with 2 of the true value to be c
- Suppose that a perfectly competitive firm has the short-run total cost function shown below: There are 2000 firms in this industry and the market demand curve is as follows: What is the equilibrium price of the product?
- Two firms facing an inverse demand function P(Q) = 200 - 10(q_1 + q_2) compete on quantity (Cournot Competition). Here Q = q_1 + q_2. Firm 1 has a constant marginal cost of 10, whereas firm 2 has a co
- A perfectly competitive market has market demand that can be represented by the equation P = 200 - 2Q. Furthermore, you are told that all firms in the market are identical and that the total cost function and the marginal cost function for a representativ
- Two firms, 1 and 2, compete in a market with demand P = 1 - Q, where P is the market price and Q is the market output. The marginal costs of firm 1 is 1/2 and firm 2 is c less than 3/4. a) Compute the
- Consider a Cournot industry with 2 firms. The demand is given by P = 120 - 2 Q, where Q is the total quantity produced by all firms in the market. The marginal cost is c = 20. Which of the following is true? A) The reaction function of firm 1 is q_1 = 50
- A perfectly competitive firm faces a price of P = 15 and has a total function of TC = q^2 + 4q + 14. (a) What quantity should the firm produce in the short run? Remember that this means the firm still needs to pay the fixed part of its cost function. (b)
- Three firms compete in Cournot competition in a market where the inverse demand function is P(q1, q2, q3) = 50 - q1 - q2 - q3. Each has per-unit cost 10 and zero fixed cost. They simultaneously choose quantities. What is the Nash equilibrium quantity for
- Suppose that an industry is characterized as follows: C = 100 + 2q^2 (each firm's total cost function). MC = 4q (firm's marginal cost function). P = 90 - 2Q (industry demand curve). MR = 90 - 4Q (indu
- Given: Market Demand Curve: Q=100-2P Industry/ Firm Cost Function: TC=2q Assumptions: 1. These are only 2 firms in the industry. 2. If the firm is competitive (or seemingly competitive), they equally share the industry output. 3. If the firms collud
- A perfectly competitive firm is in the short run and has variable cost = 6q^2 and MC = 12q, where q is the quantity of output produced. The firm has fixed cost F = 1012. a. How do you find the break-even price for this market? b. Suppose the market demand
- All firms in a Cournot monopolistically competitive industry have the same cost function C(q) = 25 + 10q. Market demand is Q = 110 - p. (i) Calculate the equilibrium price, firm output, total output and number of firms in the industry. (ii) How would th
- Suppose that a competitive firm has a total cost function of C(q) = 410 + 15q + 2(q^2) and a marginal cost function of MC(q) = 15 - 4q. If the market price is P = $131 per unit, find: a) The level
- Suppose there are n identical firms in a market, and the market is in competitive long-run equilibrium. Each firm's total cost function is given by C = 25 + q2, where q is the amount that an individua
- There are 40 firms in a perfectly competitive market. These firms have identical marginal cost of: MC = 2.9q + 7.5. Market demand is Q_D = 89 - 3.5P. Calculate the market price. Round your answer to t
- Suppose the total cost for a given firm is characterized by the following equation: TC=4q^2+4q+10 (marginal cost is given by MC=8q+4) The firm operates on a perfectly competitive market with a demand given by: P_d=100-2Q, where Q is the total quantity of
- The market demand function for a good is given by Q = D(p) = 800 - 50p. For each firm that produces the good, the total cost function is TC(Q) = 4Q + Q2/2. The marginal cost is MC(Q) = 4 + Q. Assume that firms are price takers. a. What is the supply funct
- Duopoly quantity-setting firms face the market demand P = 500 (1/3)Q where Q = Q1 + Q2. Each firm has a marginal cost of $80 per unit. What is the Cournot equilibrium?
- a) Duopoly quantity setting firms face the market demand P = 150 - Q. Each firm has a marginal cost of 60 per unit. What is the Stackelberg equilibrium when Firm 1 moves first? i). Q1 = 30, Q2 = 30,
- In a perfectly competitive market, market demand is given by P = 81 2 Q , and market supply is P = 6 Q + 1 . Each firm has short-run marginal cost M C = 120 Q + 1 , and short-run average total cost of A T C = 60 Q + 3.75 ; Q + 1. A T C for each firm
- A perfectly competitive firm has a total cost function given by T C(Q) = 2Q3 - 20Q2 + 100Q. a) What will be the optimal quantity produced by the firm if the market price is P = 300? What will be the
- The long-run total cost function for each firm in an industry is C = 2q^3 - 4q^2 + 15q . There is perfect competition. How many units will an individual firm in this sector produce in the long-run equ
- Duopoly quantity-setting firms face the market demand p=270-Q Each firm has a marginal cost of $15 per unit. What is the Cournot equilibrium for Firm 1 (q1) and Firm 2 (q2)?
- Suppose that a competitive firm has a total cost function of C(q) = 410 + 15q + 2q^2 and a marginal cost function of MC(q) = 15 + 4q. If the market price is P = $131 per unit, find the level of output produced by the firm. Find the level of profit and the
- Suppose for an individual firm in a perfectly competitive industry, its long run total cost function is: TC = 500Q -60Q(squared) + 3Q(cubed). long run marginal cost is: MC = 500 - 120Q + 9Q(squared).
- Consider a perfectly competitive, constant cost industry. All firms in this industry have an identical long-run total cost function TC (q) = 4q2 + 100q + 100 and the long-run marginal cost function MC
- Duopoly quantity-setting firms face the market demand: P = 500 - \frac{1}{3}Q where Q = q_1 + q_2. Each firm has a marginal cost of $80 per unit. Assuming the firms compete according to the Cournot model, what are the quantities chosen by each firm in equ
- Duopoly quantity-setting firms face the market demand P = 500 (1/3)Q where Q = Q1 + Q2. Each firm has a marginal cost of $80 per unit. What is the Stackelberg equilibrium when Firm 1 moves first.
- Suppose in a perfectly competitive industry that the market supply and demand forces combine to produce a short-run equilibrium price of$70. Suppose further that a single firm in this industry has a weekly total cost function expressed by the equation: TC
- All firms in a Cournot monopolistically competitive industry have the same cost function C(q) = 25 + 40q. Market demand is Q(p) = 140 - p. Calculate the equilibrium price, firm output, total output, a
- In a perfectly competitive market, market demand is given by P = 81 - 2 Q , and market supply P = 6 Q + 1 . Each firm has short-run marginal cost M C = 120 Q + 1 , and short-run average total cost of A T C = 60 Q + 3.75 ; Q + 1. A T C for each firm is
- Assume company A is a monopoly with a total cost function given as __C(q) = 50357 + 10q__, with q representing quantity. Market inverse demand is given as __P = 2450 - 2q__. Assume now that company A is forced to charge efficient price (perfect competiti
- Two firms engage in Cournot competition. They face a market demand function of 100-P. Firm 1 has a cost function C1(Q1)=10+2Q1, and firm 2 has a cost function of C2(Q2)=5+Q2. Determine the Nash equilibrium output for each firm.
- In a perfectly competitive market, industry demand is given by the following equation: Q = 1,000 - 2P. The typical firm's total cost is given by the following equation: TC = 300Q + 0.33Q2. What is the MC function? What is the MR function? What is the prof
- The market demand is P=100-1.5Q and marginal & average costs are constant at 10 (MC=AC=10) find the monopoly price and quantity. Find the perfect competition price and quantity. calculate profit, social welfare(consumer and producer surpluses), and deadw
- Given the inverse demand function: P = 15 - 0.025X, where X is the total quantity demanded: There are two firms in the market, each with a constant marginal cost of RM7.50. Find the outcome for: a) C
- A Market in perfect competition has the inverse demand function p = 50 - y. The marginal cost of production is $10. a) Calculate the equilibrium price and quantity. Calculate the monopoly power of the
- Suppose that the demand function is Q= s/p, where Q is the total quantity demanded, s is a measure of the size of the market, and p is the price of the homogeneous good. Let F be a firm's fixed cost and m be its constant marginal cost. If n firms compete
- A firm has a demand function P = 200 - 5 Q and cost function: AC = MC = 20 and a potential entrant has a cost function: AC = MC = 40. a. Determine the optimal price, quantity and economic profit for the firm if it is a pure monopolist. b. If the firm want
- Ten firms, in a Cournot oligopoly, are facing the market demand given by P = 140 - 0.4Q, where P is the market price and Q is the market quantity demanded. Each firm has a (total) cost of production given by C(qi) = 200 + 10qi, where qi is the quantity pr
- An imperfectly competitive firm has the following demand curve: Q = 200 - 2P and a marginal cost of 10. What is the optimal monopoly price and quantity? A) p = 55, Q = 90 B) p = 45, Q = 110 C) p =
- A firm that operates in a competitive market has a total cost of production given by TC(Q) = 3,000 + 5Q + 18Q^2 and marginal cost given by MC(Q) = 5 + 36Q. The market price for the product it sells is P = $239. Then the profit maximizing quantity is: (a)
- A monopolist with total cost function T C = 30Q + Q2 is facing a market demand given by P = 150 - Q. a) What is the optimal quantity and price the monopolist will set on this market? (Q=30, P=120) b
- In a perfectly competitive industry, each producer has a long run total cost function given by LTC = q^3 - 24q^2 + 200q , where a denotes the output of the individual firm. The market demand for
- An industry currently has 100 firms, each of which has fixed cost of $16 and average variable cost as follows: a. Compute a firm s marginal cost and average total cost for each quantity from 1 to 6. b. The equilibrium price is currently $10. How much does
- An industry currently has 100 firms, each of which has fixed cost of $16 and average variable cost as follows: a. Compute a firm's marginal cost and average total cost for each quantity from 1 to 6. b. The equilibrium price is currently $10. How much doe
- A profit-maximizing competitive firm uses just one input, x. Its production function is q = 4x^{1/2}. The price of output is $28 and the factor price is $7. What is the amount of the factor that the firm demands?
- A profit-maximizing competitive firm uses just one input, x. Its production function is q = 4x^{1/2}. The price of output is $28 and the factor price is $7. The amount of the factor that the firm demands is A. 8. B. 16. C. 64. D. 60. E. None of the above.
- A perfectly competitive industry has 125 identical firms. At a price of $6, the typical firm supplies 8 units of output, so the market quantity supplied is units of output. (Enter your response as an integer.)
- Two identical firms make up an industry in which the market demand curve is represented by P = 1,250 - 0.25 Q, where Q is the quantity demanded and P is the price per unit. The marginal revenue curve is given by MR = 1,250 - 0.5 Q. The marginal cost of pr
- A monopolist with total cost functionT C = 30Q + Q^2 is facing a market demand given by P = 150 - Q. a) What is the optimal quantity and price the monopolist will set on this market? (Q=30, P=120) b) What quantity and price would this firm set if it wa
- Consider the cost function of a firm for LR is: C(q) = q3 - 20q2 + 110q (5) and the demand curve of the market is: QD = 3,000 - 3P (6) (a) What is the LR equilibrium P and Q? (b) How many firms will
- Monopolistic Competition: 1. The cost function of each firm consists of a fixed cost, F = 4, and a constant marginal cost, c = 3. The "size" of the market, S = 64. The demand curve facing each firm i
- There are 100 identical firms in a perfectly competitive industry. Market demand is given by Q = -200P + 8000. Each firm has a marginal cost curve of MC = 0.4Q + 4. a. What is the firm's supply curve? What is market supply? b. What is the equilibrium pric
- Market demand for a commodity is given by P(Q) = 200 - 4Q. The firms have the identical cost structures, where c(q) = 8q a) Compute price, total quantity, and quantity per firm for two Cournot firms, b) Suppose one firm is able to act as a Stackelberg
- The demand function is Q= s/p, where Q is the total quantity demanded, s is a measure of the size of the market, and p is the price of the homogeneous good. Let F be a firm's fixed cost and m be its constant marginal cost.
- Assume a perfectly competitive market is represented by the functions Qd = -4p + 400 and Qs = p. If a firm produces in this market subject to a total cost function of TC = 2Q2 + 25Q + 100 determine th
- Consider a market for a good produced by only one firm (i.e. a monopoly). The market demand curve is given by p = 90 - q and the firm's cost function is c(q) = (1/2)q^2. Assume 'q' is the quantity and
- Firm 1 and Firm 2 compete by simultaneously choosing quantity. Both firms sell an identical product in a market with inverse demand D (Q) = 235 - 3Q. Firm i's cost function is c_i (q_i) = 14 q_i and b
- Suppose that the market inverse demand function is given by P=50-Q, and cost function of the firm(s) to be C=5qi 1) For a competitive industry, find the market price, market output and the profit at t
- An industry has two firms. The inverse demand function for this industry is p = 74 - 4q. Both firms produce at a constant unit cost of $26 per unit. What is the Cournot equilibrium price for this industry?
- 1) A monopolist and competitive firm face the following demand: Q = 106 - 0.12P This firm's cost function is: C = 2Q^2 + 80Q + 1,375 Find the quantity, Q, that maximizes profit. Round your answer to
- A market (or industry) demand curve is described by Q=600-0.5P The monopolist frim's cost function is TC=8,500+20Q a. Find the profit-maximizing quantity and price. b. If the monopoly is dissolved and
- Two firms compete in a market to sell a homogeneous product with inverse demand function P = 600 - 3Q. Each firm produces at a constant marginal cost of $300 and has no fixed costs. Use this informati
- Suppose a representative firm in a perfectly competitive, constant-cost industry has a cost function TC=5Q^2+120Q+150. a. What is the long-run equilibrium price for this industry? Make sure to show yo
- Two identical firms make up an industry in which the market demand curve is represented by Q = 5,000 - 4P, where Q is the quantity demanded and P is the price per unit. The marginal cost of producing the good in this industry is constant and equal to $650
- Two firms are engaged in Cournot competition. They face an inverse demand function given by P = 57 - Q, where Q is the amount of total output produced by the two firms. Each firm has a constant marginal cost c = 3. There are no fixed costs. Find the pric
- All firms operating in a competitive market have cost functions: \\ C(Q) = 16 - 3Q + Q^2 \\ where The marginal costs are: MC(Q) = -3 + 2Q The average total cost is: ATC(Q) = 16Q - 3 + Q \\ a) The firm is currently in the short-run, where price is: P
- Suppose in a perfectly competitive industry the market supply and demand forces combine to produce a short-run equilibrium price of $70. Further a single firm in this industry has a weekly total cost function expressed by the equation: TC = 200 + 25q - 6q
- A competitive firm has fixed costs of $16 and variable costs as follows: Quantity ; Variable Cost ; 0 ; $0 ; 1 ; $1 ; 2 ; $4 ; 3 ; $9 ; 4 ; $16 ; 5 ; $25 ; 6 ; $36 ; a. The market equilibrium price is
- All firms in a competitive industry have long-run total cost curves given by LTC = Q3 - 10Q2 + 36Q, where Q is the firm's level of output. a. What will be the industry's long-run equilibrium price? b. What will be the long-run equilibrium output level of
- A firm operating in a purely competitive market has a total cost function given by c(y) = y^2 + 10 for y 0 and c(0) = 0. At what quantity is the firm's marginal cost equal to its average cost?