Question: 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 the minimum point occurred at an output of 1,000 boxes per month. The market demand curve for boxes was:
QD = 140,000 – 10,000P
Where P is the price of a box (in dollars per box) and QD is the quantity of boxes demanded per month. The market supply curve for boxes was:
QS = 80,000 + 5,000P
Where QS is the quantity of boxes supplied per month.
a) What is the equilibrium price of a box?
b) What is the equilibrium quantity of boxes in the market?
c) How many firms in the market?
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