Suppose there were 80 identical firms operating in the industry in the short run.

The Question: Suppose there were 80 identical firms operating in the industry in the short run. Price was Birr 10 Further assume that the short run profit the existing competitive firms enjoy that attracts 80 more firms to enter the industry. The increase in output following the entry of the new firms has also dampened market price from Birr 10 to Birr 8.

(A) What will be the long run equilibrium output of a firm and the industry?
(B) How much profit do firms in the industry enjoy? What is the implication of the profit?
(C) Derive the short run and long run supply curves of the industry.
(D) What happens to the consumers surelus?​

Answer: Transcribed image text: Suppose there are 100 identical firms in a perfectly competitive industry, each having short-run total costs given by STC = 0.5q2 + 10 + 5, (2) where q is the output of each firm. (a) (10) Calculate the firm’s short-run supply curve with q as a function of market price (P). (b) (6) What is the short-run supply curve for the industry as a whole?