A firm in a purely competitive industry is currently producing 1200 per day at a

Question

A firm in a purely competitive industry is currently producing 1200 per day at a total cost of $ 600. If the firm produced 1000 units per day, its total cost would be $ 400, and if it produced 700 units per day, its total cost would be $ 375.

What is the firm's ATC per unit at these three level of production? if every firm in this industry has the same cost structure, is the industry in long run competitive equilibrium? from what you know about these firms cost structure, what is the highest price possible price per unit that could exist as market price in the long run equilibrium? if that price ends up being the market price and if the normal rate of profit is 10 percent, then how big will each firms accounting profit per unit be?

Explanation / Answer

A firm in a purely competitive industry is currently producing 1200 units per day at a total cost of $600.00. If the firm produced 1000 units per day, its total cost would be $400.00, and if it produced 700 units per day, its total cost would be $375.00. What is the firm's ATC at these levels of production? The firm's ATC at 1200 units per day is $ .5 The firm's ATC at 1000 units per day is $ .4 The firm's ATC at 700 units per day is $ .535 ----------------------------------------… From what you know about these firms’ cost structures, what is the highest possible price per unit that could exist as the market price in long-run equilibrium? $ .4 ----------------------------------------… If that price ends up being the market price and if the normal rate of profit is 10.00 percent, then how big will each firm’s accounting profit per unit be? Instructions: Round your answer to two decimal places. Accounting profit will be _____4________ cents per unit. PLEASE RATE

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