Question

A perfectly competitive industry consists of many identical firms, each with a long-run average total cost of LATC = 800 – 10Q + 0.1Q2 and long-run marginal cost of LMC = 800 – 20Q + 0.3Q2. In long-run equilibrium, each firm produces a quantity of ____. 50 40 30 60

Answer 1

Answer:

50

Explanation:

According to the question, The computation of the quantity produce is shown below:

Here we use the differentiation LRAC to zero

$\frac{\partial LRATC}{\partial Q}=-10+0.2Q=0\\\\ 0.2Q=10\\\\ Q=50$

From above calculation it can be concluded that the each firm would be produced the quantity of long run equilibrium for 50

Hence, the first option is correct