3. Apples are produced in a perfectly competitive industry. Assume that there are 100 identical firms in this industry. Below are graphs for the market supply and demand as well as the cost curves of these firms. 6. 6. MC ATC AVC 1 100 200 300 400 500 600 3 Q(kg) q(kg) (a) Draw the market supply curve for apples. (b) What are the market price and quantity for apples? How much does each firm produce? (c) Caleulate the amount of profit or loss for a firm. (d) Do you expect there to be entry of new firms into this industry, the exit of firm from this industry or neither of the above? Briefly explain. (e) What is the long run equilibrium price of apples and exactly how many (identical) firms will be producing the good? P(TL/unit) P(TL/unit) 2.

3. Apples are produced in a perfectly competitive industry. Assume that there are 100 identical firms in this industry. Below are graphs for the market supply and demand as well as the cost curves of these firms. 6. 6. MC ATC AVC 1 100 200 300 400 500 600 3 Q(kg) q(kg) (a) Draw the market supply curve for apples. (b) What are the market price and quantity for apples? How much does each firm produce? (c) Caleulate the amount of profit or loss for a firm. (d) Do you expect there to be entry of new firms into this industry, the exit of firm from this industry or neither of the above? Briefly explain. (e) What is the long run equilibrium price of apples and exactly how many (identical) firms will be producing the good? P(TL/unit) P(TL/unit) 2.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Productive and Allocative Efficiency Analysis

Productive efficiency, also referred to as production efficiency is a term in economics describing the level at which a company is operating at its maximum capacity. Beyond this point, the entity will be unable to manufacture any additional goods without cutting down another product’s production level. This occurrence is an outcome of production happening alongside a Production Possibility Frontier (PPF).

Question

3. Apples are produced in a perfectly competitive industry. Assume that there are 100 identical
firms in this industry. Below are graphs for the market supply and demand as well as the cost
curves of these firms.
6.
ATC
AVC
1
0 100 200 300 400 500 600
Q(kg)
3
4.
6
q(kg)
(a) Draw the market supply curve for apples.
(b) What are the market price and quantity for apples? How much does each firm produce?
(c) Calculate the amount of profit or loss for a firm.
(d) Do you expect there to be entry of new firms into this industry, the exit of firm from this
industry or neither of the above? Briefly explain.
(e) What is the long run equilibrium price of apples and exactly how many (identical) firms
will be producing the good?
P(TL/unit)
2.
P(TL/unit)
2.

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What is the firms profit or loss?