2. A perfectly competitive industry has a large number of potential entrants. Each firm has an identical cost structure such that minimum long-run average cost is $10 per unit and occurs at an output of 20 units. The market demand is given by Qp 1,500 - 50P And industry output? _And the profit earned by each firm? A. What is the long-run equilibrium price? number of firms?_ _And firm output?_ And the B. The short-run cost function associated with each firm's long-run equilibrium output is given by Cg) 0.5 q-10 +200. Calculate the short-run average cost function. Show your work C. Find the output level at which short-run average cost is minimized. Show your logic and work. D. Calculate the short-run supply function for each firm. Show your logic and work E. Calculate the industry's short-run supply function. Show your logic and work. F. Using the demand function, Q, 1,500 - 50P, (in 2 above) and this supply function, compute the industry equilibrum price and output. Show your logic and calculations G. Graph this demand function and supply function. Label the axes and the values of the intercepts and the equilibrium H. Suppose the market demand function shifts to Q 2,500 - 50P. What is the new short-run equilibrium price and industry output? Show your logic and work
2. A perfectly competitive industry has a large number of potential entrants. Each firm has an identical cost structure such that minimum long-run average cost is $10 per unit and occurs at an output of 20 units. The market demand is given by Qp 1,500 - 50P And industry output? _And the profit earned by each firm? A. What is the long-run equilibrium price? number of firms?_ _And firm output?_ And the B. The short-run cost function associated with each firm's long-run equilibrium output is given by Cg) 0.5 q-10 +200. Calculate the short-run average cost function. Show your work C. Find the output level at which short-run average cost is minimized. Show your logic and work. D. Calculate the short-run supply function for each firm. Show your logic and work E. Calculate the industry's short-run supply function. Show your logic and work. F. Using the demand function, Q, 1,500 - 50P, (in 2 above) and this supply function, compute the industry equilibrum price and output. Show your logic and calculations G. Graph this demand function and supply function. Label the axes and the values of the intercepts and the equilibrium H. Suppose the market demand function shifts to Q 2,500 - 50P. What is the new short-run equilibrium price and industry output? Show your logic and work
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Parts D,E,F
Transcribed Image Text:2. A perfectly competitive industry has a large number of potential entrants. Each firm has an identical cost
structure such that minimum long-run average cost is $10 per unit and occurs at an output of 20 units. The
market demand is given by Qp 1,500 - 50P
And industry output?
_And the profit earned by each firm?
A. What is the long-run equilibrium price?
number of firms?_
_And firm output?_
And the
B. The short-run cost function associated with each firm's long-run equilibrium output is given by
Cg) 0.5 q-10 +200. Calculate the short-run average cost function. Show your work
C. Find the output level at which short-run average cost is minimized. Show your logic and work.
D. Calculate the short-run supply function for each firm. Show your logic and work
E. Calculate the industry's short-run supply function. Show your logic and work.
F. Using the demand function, Q, 1,500 - 50P, (in 2 above) and this supply function, compute the industry
equilibrum price and output. Show your logic and calculations
G. Graph this demand function and supply function. Label the axes and the values of the intercepts and the
equilibrium
H. Suppose the market demand function shifts to Q 2,500 - 50P. What is the new short-run equilibrium
price and industry output? Show your logic and work
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