Question

Suppose you are given the following information about a particular industry: Market demand Market supply QD = 14400 - 100P QS = 1500P C(a)=673 + 20 MC(q) = 200 Firm total cost function Firm marginal cost function. Assume that all firms are identical and that the market is characterized by perfect competition. Find the equilibrium price, the equilibrium quantity, the output supplied by the firm, and the profit of each firm. The equilibrium price is $ 9. (Enter your response rounded to two decimal places.) The equilibrium market quantity is 13500 units. (Enter your response rounded to two decimal places.) The output supplied by one firm is 900 units. (Enter your response rounded to two decimal places.) Finally, the profit of each firm is $ 3377. (Enter your response rounded to two decimal places.) Would you expect to see entry into or exit from the industry in the long run? Explain. What effect will entry or exit have on market equilibrium? Firms should enter the industry due to positive economic profit. This will decrease market price and increase market quantity What is the lowest price at which each firm would sell its output in the long run? Is profit positive, negative, or zero at this price? Explain. The lowest price at which each firm would sell its output in the long run is $ , at which point profit will be (Enter your response rounded to two decimal places.) positive negative zero Enter your answer in the newer boy and then clickbank Anourer

Answer 1

Ques for Individual from,.). 6. Profit marimization condition well be ! E IRE MC for calculating Pa 14400 - 100 P = 1500 P 14400 = 16ool 9 +1400 isip! orx 4600 .sbfcon Now, Pame 9 = 2q -800 goo @ = q toufput supplied by each finn Scared with Cam Scanner

PAGE put pt in е де, Market Demand not contra il 1thing - 14400 -100.69 = 14400 - Soo O* 1350D) | - 4 fqi übrium I woon in nith market quantity +=1 The TC - - piq-1673 + q 2 A 200 = 900x9 23+ 81000 8loo - 4723 3377 to profit of each Ics Scanned with CamScanner firm

There is economic profit in short sun those is entry of tions in the Mastet This will decrease market Price and grevear the Quantity The lowest price at which will sell its output in Long seen is P = AC = MCA firmy the AC- t 3 q 20 mc = 29 ACE me ICS, Scanned with i CamScanner 200

= 673 X 200 19 = 366.82] AC = 673 t 9 20 AC= 3.66 Hence Price in the long nen wiu be 3.66 There is zero profit at this caprice with на и се е CamScanner