Answer Happy

The market for pianos is characterized by perfect competition. All firms are identical in terms of their technological capabilities. Thus, the cost function for a representative firm can be assumed to be the cost function faced by each firm in the industry. Suppose that total costs are: TC=54+10q+1.5q and that market demand is given by: P=1228-2Q Hint: Reminder Q represents market values and q represents individual firm values. Also, since the market supply is unknown, it's better not to think of trying to solve this problem using demand and supply equations. Instead, you should think about the graph for firms in the long-run. a. What is the long-run output of each representative firm in this industry? b. What is the long-run equilibrium price in this market? c. When this industry is in long-run equilibrium, how many firms are in the industry? d. What are the long-run profits of each firm in this industry? Explain why.