Question

Answer 1

Answer:

Price	Supply(in Thousands) Q	N=20(in thousands) Q*20	N=30(in thousands) Q*30	N=40(in thousands) Q*40
15	15	300	450	600
30	20	400	600	800
40	22.5	450	675	900
70	27.5	550	825	1100
90	30	600	900	1200

Graph:

Supply (20 firms) Supply (30 firms) PRICE (Dollars per pound) Supply (40 firms) 0 123 1250 250 373 500 623 750 873 1000 1123 QUANTITY (Thousands of pounds)

If there were 20 firms in this market, the short-run equilibrium price of copper would be $40

Therefore, in the long run, firms would $per pound. At that price, firms in this industry would earn positive economic profits(as ATC < price i.e 30<40).

Therefore in the long run firms would enter the copper market

Because you know that perfectly competitive firms earn zero economic profit in the long run, you know the long-run equilibrium price must be $ 30 per pound. From the graph, you can see that this means there will be 30 firms operating in the copper industry in long-run equilibrium