Determine a completely 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(q)=8q+100
1. Determine the long-run equilibrium price for this industry?
2. How many firms will operate in this long-run equilibrium if market demand is given byQ = 1000? p , where p is the price.
3. Support the government grants a lump-sum subsidy of $36 to each firm that manufactures the
product. Discuss what would be the new long-run equilibrium price for this industry? What would happen to the number of firms in this new equilibrium?
4. Demonstrate, in a pair of diagrams, the long-run equilibrium before and after the firms receive the subsidy.