Suppose that in a perfectly competitive, constant cost industry, the minimum of long-run average cost is $40 per unit of output for each firm in the market. The market demand is given by q = 1000 - 10p and the market supply is given by q = 10p.
Added by Bradley C.
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Step 1: Set market demand equal to market supply to find the short-run equilibrium price: 1000 - 10p = 10p. Show more…
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