The global Propylene industry is perfectly competitive and each producer has the marginal cost function MC = 40-12q+q2 . The corresponding average cost function is AC=40-6q+1/3q2. The market demand curve for propylene is Q=2200-100P.
1. What is the long-run equilibrium price in this industry?
2. At this price, how much would an individual firm produce? Explain
3. How many active producers are in the propylene market in a long-run competitive equilibrium? Explain
4. How much profit an individual producer is making? Explain.