Question

The first picture below depicts the cost curves for a representative firm in this perfectly competitive industry. Initially, there are 100 firms. The second picture depicts market demand.

  

ItarginalCost 20 0 1 601 800 100 120 1000 Demaid 2000 40 000 30000 10000 120000 10000

A) Suppose that the firm produces 300 units of output, how much are their total costs?

B) What is the short-run equilibrium price?

C) At the short-run equilibrium price, what is the quantity produced by each firm?

D) At the short-run equilibrium price, what is per-firm profit?

E) In the long-run, what will happen to this industry?

F) What is the long-run equilibrium profit?

G) What is output per firm at the long-run equilibrium price?

H) In the long-run, how many firms will be in this industry?

Answer 1

@ TC300 = ATC X = 10x 300 - 3000 ® Shart eum eae when DDESS. suo D) e) f) g 4 Produced by catch fein = 600 fire profit = 3-6 ) x 600=- 1800 some fiins will exit logean egen profit a to o. lang enn equ pice = $5 Denard - 40000 & each fin produces - yoooo so foins = no. of firrins ne 8oount