Essay
Pencils are produced in a perfectly competitive industry. The demand function for pencils is given by D(p)=100- p. Average cost of producing y units is given by AC(y)=4+(2- y)2.
a)Determine the individual supply curve of each firm and find the long run industry supply curve under the assumption of free- entry.
b)What are the long run equilibrium prices and quantities?
c)How many firms enter the industry?
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