equilibrium price for the markets

Since the short-run equilibrium price for the market is $133, it makes sense for the potential entrants to enter the market. As soon as they start operating the quantity supplied will increase that will cause the market price to fall until it reaches new equilibrium of $96.

At this price each incumbent firm will supply 12 units, and all together the will produce 120 units. The quantity demanded at the price $96 will be 204 units ? new entrants will supply 204-120=84 units all together ? number of new entrants is 84/3=28. The economic profit of an incumbent firm per production unit is: Profit=P – FR-ATC=96 – 60=$36 Thus, the long-run market equilibrium price in this case is $96. Each incumbent firm produces 12 units and each entrant produces 3 units. 28 entrants operate in the market. The economic profit of an incumbent firm is 36$ per unit or $432.