Explore BrainMass

# Long-Run Equilibrium

Not what you're looking for? Search our solutions OR ask your own Custom question.

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

A number of stores offer film developing as a service to their customers. Suppose that each store offering this service has a cost function C(q) = 50 + 0.5q + 0.08q2 and a marginal cost MC = 0.5 + 0.16q.

Q: If the going rate for developing a roll of film is \$8.50, is the industry in long-run equilibrium? If not, find the price associated with long-run equilibrium.

https://brainmass.com/economics/general-equilibrium/long-run-equilibrium-summary-29538

#### Solution Preview

From the cost function, we know the firm's MC = d C(q) / dq = 0.5 + 0.16q
While its SRAC = C / q = 50/q + 0.5 + ...

#### Solution Summary

If the going rate for developing a roll of film is \$8.50, is the industry in long-run equilibrium? If not, find the price associated with long-run equilibrium.

\$2.49