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Suppose the market demand for milk is Qd = 150 - 5P. Additionally, suppose that a...

Suppose the market demand for milk is Qd = 150 - 5P. Additionally, suppose that a dairy's variable costs are VC = 2Q2 (where Q is the number of gallons of milk produced each day), its marginal cost is MC = 4Q and there is an avoidable fixed cost of $50 per day. In the long run there is free entry into the market. Suppose the demand for milk doubles.

a) What is the new long-run equilibrium price?

b) How many new firms enter the market in the long run due to the increased demand?

c) What is the market equilibrium price?

d) How many total active firms are in the market in the long run due to the increased demand?

e) What is the market equilibrium quantity?

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