firm sells its product in a perfectly competitive market where other firms
charge a price of $80 per unit. The firm’s total costs are C(Q)
= 70 + 8Q + 2Q2.
a. How much output should the firm produce in the short run?
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?
|Entry will occur until economic profits shrink to zero.|
|No firms will enter or exit at these profits.|
|Exit will occur since these economic profits are too low.|