The marked demand schedule for noodles is as follows: Price ($ per case) Q Deman
ID: 1095584 • Letter: T
Question
The marked demand schedule for noodles is as follows:
Price
($ per case)
Q Demanded
(case per week)
5.40
50,200
6.40
45,200
7.40
40,000
8.40
35,000
9.40
30,000
10.40
24,800
11.40
19,800
12.40
14,800
The market is perfectly competitive with constant input prices, and each firm has the same cost structure, described by the following table:
Output
(cases per week)
Marginal Cost
($ per case)
AVC
($ per case)
ATC
($ per case)
150
6.00
8.80
16.50
200
6.40
7.80
13.60
250
7.00
7.00
11.64
300
7.65
7.10
10.97
350
8.40
7.20
10.52
400
10.40
7.50
10.40
450
12.40
8.00
10.58
500
12.70
9.00
11.32
1. What is the long-run equilibrium price in this industry?
a. P = $8.40
b.P = $9.40
c.P = $10.40
d.P = $11.40
2. What is the number of firms in the long-run equilibrium?
a. 62
b.88
c.100
d.112
Price
($ per case)
Q Demanded
(case per week)
5.40
50,200
6.40
45,200
7.40
40,000
8.40
35,000
9.40
30,000
10.40
24,800
11.40
19,800
12.40
14,800
Explanation / Answer
1
b.P = $9.40
2
a. 62
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