A firm sells its product in a perfectly competitive market where other firms charge a price of $90 per unit. The firm's total costs areC(Q) = 60 + 14Q+ 2Q2.
a. How much output should the firm produce in the short run? ________units
b. What price should the firm charge in the short run? $_________
c. What are the firm's short-run profits? $_________
d. What adjustments should be anticipated in the long run?
- No firms will enter or exit at these profits.
- Entry will occur until economic profits shrink to zero.
- Exit will occur since these economic profits are too low.