A representative firm in a perfectly competitive market has a total cost function:

ATC(q) =

Question

# 1. A representative firm in a perfectly competitive market has a total cost function:

ATC(q) =

72/q + 4 + 2q and MC(q) = 4 + 4q.

a. What is the firms fixed cost (FC) and variable cost (VC)?

b. Calculate the market price at which profits would be zero.

c. Calculate the profits or losses of the firms when price is $16.

d. The market demand is given by Qd = 2000 – 20p. In the long run, what will the market demand be? How many firms will there be?

I know the answer to A already, but i don’t know how to get the answer for the rest.

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