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| Suppose that the market for auto detailing in a city is perfectly competitive. The auto detailing firms are identical and have long-run cost functions given by TC(Q) = 10Q3 – 100Q2 + 300Q. Market demand is QD = 5,000 – 90P. a. Derive the marginal and average cost curves for a firm in this industry. b. Find the quantity at which average total cost is minimized for each firm. c. Find the long-run equilibrium price in this industry. d. Use market demand to find the equilibrium total industry output. e. Find the equilibrium number of firms. |
