Economics help needed
I have been scratching my head about this problem for a while, i dont know what to do.
Consider a price taking firm with cost function C(q) = 50 + 0.5q + 0.08q^2
a.) if the current market price is £8.50 then show that this industry is not in long run equilibrium
b) Find the price associated with long run equilibrium
In long run equilibrium, the profit of the firm = 0
So if you computer profit = revenue - cost, you will find that profit >0, which proves that the firm is not in long run equilibrium.
To find the long run equilibrium price, set profit = 0 and find the x that solves the equation.