Essay
A perfectly competitive industry has two types of firms operating in long-run equilibrium: low-cost and high-cost producers. For the low-cost producers, LATCL = 100/Q + 0.5Q and LMCL = Q. For the high-cost producers, LATCH = 100/Q and LMCH = 2Q.
a. What's the long-run equilibrium price?
b. How much economic rent does a low-cost producer earn?
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