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. d) If the demand fell to Y = 185 - p, briefly expiain 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. d) If the demand fell to Y = 185 - p, briefly expiain 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.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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