Question: a firm sells its product in a perfectly competitive market...
A firm sells its product in a perfectly competitive market where
other firms charge a price of $70 per unit. The firm’s total costs
are C(Q) = 60 + 14Q +
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?
Exit will occur since these economic profits are too low.
No firms will enter or exit at these profits.
Entry will occur until economic profits shrink to zero.