[10 pts] For this problem, do not worry if prices and quantities are not “realistic.” Suppose that the market for photocopies in Washington DC is perfectly competitive, and is given by the following equations: Q D = 72 − P Q S = 5P where QD is the daily demand for copies in DC and QS is the total supply curve of all copy stores together in DC. a) What is the equilibrium price and quantity of copies in DC? P*=__________ Q*=__________ Now, consider the cost schedule for Kinky’s Kopies, a typical copy store in DC: TC = 2q2 + 18 MC = 4q where q (lower-case q) is the number of copies made by the single store
b) What is Kinky’s fixed cost? _______________
c) Assuming Kinky’s behaves as a profit maximizing firm in a perfectly competitive market, how many copies will it produce?
d) What is the total revenue of Kinky’s ? __________________ e) What is the total cost for Kinky’s? __________________ f) What is Kinky’s average total cost (ATC) and marginal cost (MC)? ATC =______________ MC =________________ g) What is the profit of Kinky’s? __________________ h) If all of the other copy stores in this perfectly competitive market in DC have identical cost curves and behave exactly like Kinky’s Kopies, how many copy stores will there be in long-run equilibrium?