13) The cobalt mining company is perfectly competitive. Each existing firm and every potential entrant faces an identical U- shaped average cost curve. The minimum level of average cost is $5 per ton and occurs when the firm produces y = 2 million tons of cobalt per year. The market demand curve for cobalt is Y = 205 - p, where Q is in millions of tons per year and the market price p is in dollars per ton. a) What is the long-run equilibrium price of cobalt? Explain your answer. b) How much cobalt does each producer make at this equilibrium price? Explain your answer. c) How many active cobalt producers will be in the market? Explain your answer. d) If the demand fell to Y = 185 - p, briefly explain what you would expect to happen to the following in the long run: i) price. ii) firm quantity. iii) firm profits. iv) the number of firms.

13) The cobalt mining company is perfectly competitive. Each existing firm and every potential entrant faces an identical U- shaped average cost curve. The minimum level of average cost is $5 per ton and occurs when the firm produces y = 2 million tons of cobalt per year. The market demand curve for cobalt is Y = 205 - p, where Q is in millions of tons per year and the market price p is in dollars per ton. a) What is the long-run equilibrium price of cobalt? Explain your answer. b) How much cobalt does each producer make at this equilibrium price? Explain your answer. c) How many active cobalt producers will be in the market? Explain your answer. d) If the demand fell to Y = 185 - p, briefly explain what you would expect to happen to the following in the long run: i) price. ii) firm quantity. iii) firm profits. iv) the number of firms.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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