Q2.) In a perfectly competitive market the market demand curve is described by the equation

QD = 500 - 0.5P, and the market supply curve is

QS = P - 100.

The typical cost function of the firms in the market is

C = 100 + q + q2.
(q is the quantity supplied by one firm)
a. Determine the equilibrium quantity and price in this market?
b. Determine the typical firm’s profit maximizing level of output, total revenue,
total cost and profit at this equilibrium? Is this a short run or long run equilibrium?
Explain your answer. (Round the number of units to one decimal place and dollar
amounts to two decimal places).
Firms set MR= MC
c. What will happen in this market in the long run?
d. Determine the long run equilibrium quantity and price for a typical firm to produce
in this market? Explain your answer.
At the long run equilibrium price, how many units of this good will be produced in
this market? (Round the number of units to one decimal place).