Question

Question 10 (1 point) In a long-run competitive market equilibrium, existing firms produce at the efficient scale of production and make zero profit. True False Question 11 (1 point) Suppose that all existing firms in a long-run competitive market equilibrium are identical and have the following cost function C(Q) = A +Q2 with fixed cost A=$125.0 and MCIQ)=2Q. What is the market equilibrium price? No units. If necessary, round to 2 decimal places. Your Answer: Your Answer

Answer 1

Q10
Answer
True
the market has free entry and exits and the product is identical so the long-run production level is at ATC=MC=P
so the production is efficient MC=ATC and profit are zero as P=ATC.
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Q11
the firm produces at MC=ATC inn long run where P=ATC
MC=2Q
ATC=C/Q=125/Q+Q
2Q=125/Q+Q
Q=125/Q
Q^2=125
Q=11.1803399
P=ATC=125/11.1803399+11.1803399=22.3606798
P=22.36
the price is $22.36