The next 5 questions relate to the following scenario: In a perfectly competitiv

Question

The next 5 questions relate to the following scenario: In a perfectly competitive market, market demand is 380-2P and market supply ise firm has short-run MC-SQ and ATC 2.5Q + (1000) ATC is at minimum when Q = 6.32). 20. Each How much output will each firm produce? a. 180 b. 10 c. 20 d. 100 4. What is the profit/loss for each firm in the short-run? a. $-7, 000 b. $900 c. $2, 500 5. How many firms are there in the industry in the short-run? a. 12 b. 5 c. 9 d. 20 6. What will the price be in long-run equilibrium? a. $31.62 b. $100 7. $6.32 d. $48.85 How many firms will there be in long-run equilibrium? a. 50.12 b. 28.89 c. 107.27 d. 180 8. Why are long-run average-total-cost curves often a. 9. are often U-shaped of production and increasing because of the same reasons that average-total of increasing coordination problems

Explanation / Answer

8) 28.89 is correct

For market output Qd=Qs

380-2P=2P-20

P=100

Q= 380-2(100)=180

ATC is minimum at Q=6.32

Number of firms= 180/6.32= 28.89

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