PART B 1. Perfect Competition (15 points) Suppose you are given the following information about a particular industry: Market demand: QD = 5,000 -100P; Market supply: Qs = 40OP; Firm

PART B
1. Perfect Competition (15 points)
Suppose you are given the following information about a particular industry:
Market demand:
QD = 5,000 -100P;
Market supply:
Qs = 40OP;
Firm total cost function:
C(q) = 9+q
Suppose all firms are identical, and the market is characterized by perfect competition.
(a) (4 points) Find the output supplied by the firm and the profit of each firm.
(b) (2 points) How many films will sell in this market?
(c) (3 points) Would you expect to see entry into or exit from the industry in the long
run? Explain. effect will entry or exit have on market equilibrium?
(d) (4 points) is the lowest price at which each firm would sell its output in the
long run? Is profit positive, negative, or zero at this price? Explain.
(2 points) is the lowest price at which each firm would sell its output in the
short run? Is profit positive, negative, or zero at this price? Explain.

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