Question

Question Help MUILUTUI TUDIEN 14 (static) the market for smoothies is perfectly competitive. the top table sets out the market demand schedule for smoothies. Each of the o producers of smoothies has the costs shown in the bottom table when it uses least-cost plant hat is the market price of a smoothie? what is the market quantity of smoothies? How many smoothies does each firm sell? What is the economic profit made or economic loss incurred by each firm? the market price is a smoothie and the market quantity is smoothies an our. -> Answer to 2 decimal places for the market price Price (dollars per smoothie) 1.90 2.00 2.20 2.91 4.25 5.25 5.50 Quantity demanded (smoothies per hour) 1,000 950 800 700 550 400 300 Quantity (smoothies per hour) Marginal cost (dollars per additional smoothie) 2.50 2.20 1.90 2.00 2.91 4.25 8.00 Average Average variable cost total cost (dollars per smoothie) 4.00 7.33 3.53 6.03 3.24 5.24 3.00 4.67 2.91 4.34 3.00 4.25 3.33

Answer 1

A firm would produce where P = MC.

If there are 100 firms:

Market price = 2.91 (Qd = 700 = Qs =100 x 7)

Market quantity = 700

Each firm quantity = 7

Economic loss (each firm) = (ATC - P) x Qf = (4.34 - 2.91) x 7 = 10.01