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# What is the equilibrium price of a widget?

Market Structure Problem #1: The Widget Industry:

The Widget industry is perfectly competitive. The lowest point on the long-run average cost curve of each of the identical widget producers is \$4 and this minimum point occurs at an output of 1,000 widgets per month. When the optimal scale of a firm's plant is operated to produce 1,150 widgets per month, the short-run average cost of each firm is \$5. The market demand curve for widgets is:

Qd= 140,000 -10,000P where Qd is the quantity of widgets demanded per month and P is the price of a widget.
The market supply curve is:

Qs= 80,000 + 5,000P, where Qs is the quantity of widgets supplied per month and P is the price of a widget.

1) What is the equilibrium price of a widget? Is this the long-run equilibrium price, and if so, how did you know this?

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1) What is the equilibrium price of a widget? Is this the long-run equilibrium price, and if so, how did you know this?

The condition for ...

\$2.19