solution

In 2012, the box industry was perfectly competitive. The lowest point on the

long-run average cost curve of each of the identical box producers was $4, and

this minimum point occurred at an output of 1,000 boxes per month. The

market demand curve for boxes was QD = 140,000 – 10,000Pwhere P was the price of a box (in dollars per box) and QD was the quantity of boxes demanded per month. The market supply curve for boxes was QS = 80,000 + 5,000P where QS was the quantity of boxes supplied per month.

a. What was the equilibrium price of a box? Is this the long-run equilibrium price?

b. How many firms are in this industry when it is in long-run equilibrium?