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    Determining long run equilibrium output

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    A perfectly competitive constant cost industry contains a number of firms, each of which has the following long-run total cost function, where q is annual output:
    TC = 0.01q3 - 1.2q2 + 111q
    The market demand curve for the product is:
    Q = 5,800 - 20p
    where Q is annual industry sales.
    (a) Calculate the long-run equilibrium output of the industry.
    (b) How many firms are there in the industry in long run?

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    https://brainmass.com/economics/general-equilibrium/determining-long-run-equilibrium-output-212689

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    Solution Preview

    Please refer attached file for better clarity of algebraic expressions.

    Solution:

    TC = 0.01q3 - 1.2q2 + 111q
    Average Total Cost = TC/Q=0.01 q2 -1.2q+111
    d(ATC)/dq=0.02q-1.2
    We are ...

    Solution Summary

    The solution describes the steps for finding long run equilibrium output for perfectly competitive environment. It also determines number of firms working in long run.

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