Homework Answers
a) In the long run price is equal to minimum of LRAC
Here LRAC = 2q^2 – 4q + 4 and so LRAC’(q) = 0 gives 4q – 4 = 0 or q = 1. Hence long run price is fixed at P = 2(1^2) – 4*1 + 4 = $2
b) Total quantity traded Q = 516 – 2 – 2^2 = 510 units
c) Number of firms = Qs/qs = 510/1 = 510 firms
d) It is a constant cost industry so long run supply function is a horizontal line fixed at a price of $2.
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Possible Answers
1: Earn zero profit, Earn positive profit, shut down, operate at
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2: Enter, Exit, Neither
3:Zero, Positive, Negative
4:10,15,20
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Please show as much work and explanation as
possible, thank you so much!
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Number 6 . Can you explain the reasoning behind please
6. A perfectly competitive firm produces where p MC-ATC. -M尺 a. Its marginal revenue is always equal to the market price. b. Its marginal cost is always equal to the market price. c. Its marginal revenue is always equal to the average total cost. d. All of the above are correct. 7. The fol llowing graphs show the market for a good traded in a perfectly competitive market, and the...
Possible Answers
1: Earn zero profit, Earn positive profit, shut down, operate at
a loss
2: Enter, Exit, Neither
3:Zero, Positive, Negative
4:10,15,20
Consider the perfectly competitive market for copper. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average cost (AC), and average variable cost (AVC) curves shown on the following graph. 100 90 80 70 60 50 40 AC 30 20 AVC MC...
Please help me answer this economics question concerning
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