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2. A competitive industry has 12 identical firms, each one has a total variable cost function TVC(a) 402 and a marginal cost function MC(a) 40+q, the firms fixed cost.s are entirely non-sunk (that is, must be paid only if q >0) and equal to 50. (a) Calculate the price below which the firm will produce q 0. (b) The market demand is QD(p) 360-2p. What is the short-run equilibrium price and quantity supplied by each firm? Calculate each firms proft (c) Suppose demand does not change in the long run, and the cost function are the same too. What is the long-run equilibrium price and quantity? How many firms will be in the industry?

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Q2 (a)Fim must shuut-doon f price Avelage Nauable AVC TV org Nlou uoe knouo thodt un der bertect cempehben PniceMC i Cure mc(%) : 40+4 Avcle)- 40149 40 Quanht 4f price smaules than 40 thena-O (Annod lb) subbly of a gim frm at any gien bme s of a oivern firm at am =P-46 whene P: Price At equiubnum, Aubb demand 1 (P-40) 360-2 F P coHence equi li brium byte, Px=co equi blied by each fom 6040- ibvium quant sub Profit of each frm.7: Revenue-Cost c) tn the leng run there wil htt any But that means modced yeach frm is the miumizahen q fo ATC (Average Total (ast) TC: TVC + Fixed Cost S0 d ATC d 1 demand: Q%o):360-4(g|:,60 at p:so But Lo

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