estdion Help Since the equilibrium in the previous problem has positive profit p
ID: 1117550 • Letter: E
Question
estdion Help Since the equilibrium in the previous problem has positive profit per firm, t is not a long-run equilibrium. However, since the AC curve in the problem is u everywhere, it is not possible to construct a zero-profit equilibrium given the assumptions of the problem (this outcome requires a U-shaped AC curve). This problem will consider an alternative example where a long-run equilibrium exists. Let the total cost function for an individual fim be given by C 2040 average cost for Q 1, 2, 3, ,14, 15. firm be given by C -2040-400? 2a. Compute a) Using your results, find the long-run equilibrium price in the market. This price is given by p- sults, find the long un (don't include a S sign in your b) Suppose that the (inverted) market demand curve for thelproduct is given by Q 50000- 10000P. What total price? c) From (b), you know how much total output must be delivered by all fims (a), compute the number of firms in the industry in the long-run equilibrium. This number is s operating in the long-run equilbrium. Using this number along with the results from partExplanation / Answer
Q TC ATC 1 166 166 2 264 132 3 306 102 4 304 76 5 270 54 6 216 36 7 154 22 8 96 12 9 54 6 10 40 4 11 66 6 12 144 12 13 286 22 14 504 36 15 810 54 a) In the long run firm charges price equal to minimum value of ATC.Price charged = 4. Each firm produces Q = 10. b) Put the price obtained in part a) in the market demand function to obtain total demand. Market demand = 10000 c) Number of firms = Total demand/ Out per firm. N = 10000/10 number of firms = 1000.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.