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Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive. a) If the sh
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Answer #1

Answer

a)

The firm produces at MC=P in the short run

From the market the equilibrium at Q=Qs at S1

P=$20

At $20 from the firm curves MC=P

Q=400 gallons per week

======

b)

In the long run, the firm produces at MC=ATC level

Where

Q=300 gallons per week

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