In a particular market there are several hundred firms, all ofthe firms produce an identical product, and it is easy to get inand out of the market. At the current market equilibrium we observethe following for a typical firm:
P=100
MC=100
ATC=75
- Find the firm's marginal revenue
- Is this firm maximizing profit? Explain how you can tell.
- Find the firm's profit.
- What two things must be true for a competitive market to be ina long run equilibrium?
- Is this market in a long run equilibrium? Why or why not?
- What do you expect to happen to the price in this market? Whatdo you expect to happen to the number of firms in this market
