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4. The egg industry comprises many firms producing an identical product. Supply and demand conditions are indicated in the left-hand panel of the figure below; the long-run cost curves of a representative egg producer are shown in the right-hand panel. Currently, the market price of eggs is $2 per dozen, and at that price consumers are purchasing 800,000 dozen eggs per day. (a) Market Price ($) S $2- 1.50 1 0.50- 0 800 1,200 1,600 2,000 2,400 Quantity (thousands of dozens) Price & cost ($/unit) -$2- 1.50- 1 0.50- (b) Firm LMC LATC 0 1,000 2,000 2,300 2,400 Quantity (dozens) a. Determine how many eggs each firm in the industry will produce if it wants to maximize profit. b. How many firms are currently serving the industry? c. In the long run, what will the equilibrium price of eggs be? Explain your reasoning, and illustrate your reasoning by altering the graphs above. d. In the long run, how many eggs will the typical firm produce? e. In the long run, how many firms will comprise the industry?

4. The egg industry comprises many firms producing an identical product. Supply and demand conditions are indicated in the left-hand panel of the figure below; the long-run cost curves of a representative egg producer are shown in the right-hand panel. Currently, the market price of eggs is $2 per dozen, and at that price consumers are purchasing 800,000 dozen eggs per day. (a) Market Price ($) S $2- 1.50 1 0.50- 0 800 1,200 1,600 2,000 2,400 Quantity (thousands of dozens) Price & cost ($/unit) -$2- 1.50- 1 0.50- (b) Firm LMC LATC 0 1,000 2,000 2,300 2,400 Quantity (dozens) a. Determine how many eggs each firm in the industry will produce if it wants to maximize profit. b. How many firms are currently serving the industry? c. In the long run, what will the equilibrium price of eggs be? Explain your reasoning, and illustrate your reasoning by altering the graphs above. d. In the long run, how many eggs will the typical firm produce? e. In the long run, how many firms will comprise the industry?

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: Firms In Competitive Markets
Section: Chapter Questions
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4. The egg industry comprises many firms producing an identical product. Supply and demand conditions are indicated in the left-hand panel of the figure below; the long-run cost curves of a representative egg producer are shown in the right-hand panel. Currently, the market price of eggs is $2 per dozen, and at that price consumers are purchasing 800,000 dozen eggs per day. (a) Market Price ($) S $2- 1.50 1 0.50- 0 800 1,200 1,600 2,000 2,400 Quantity (thousands of dozens) Price & cost ($/unit) -$2- 1.50- 1 0.50- (b) Firm LMC LATC 0 1,000 2,000 2,300 2,400 Quantity (dozens) a. Determine how many eggs each firm in the industry will produce if it wants to maximize profit. b. How many firms are currently serving the industry? c. In the long run, what will the equilibrium price of eggs be? Explain your reasoning, and illustrate your reasoning by altering the graphs above. d. In the long run, how many eggs will the typical firm produce? e. In the long run, how many firms will comprise the industry?
Transcribed Image Text:4. The egg industry comprises many firms producing an identical product. Supply and demand conditions are indicated in the left-hand panel of the figure below; the long-run cost curves of a representative egg producer are shown in the right-hand panel. Currently, the market price of eggs is $2 per dozen, and at that price consumers are purchasing 800,000 dozen eggs per day. (a) Market Price ($) S $2- 1.50 1 0.50- 0 800 1,200 1,600 2,000 2,400 Quantity (thousands of dozens) Price & cost ($/unit) -$2- 1.50- 1 0.50- (b) Firm LMC LATC 0 1,000 2,000 2,300 2,400 Quantity (dozens) a. Determine how many eggs each firm in the industry will produce if it wants to maximize profit. b. How many firms are currently serving the industry? c. In the long run, what will the equilibrium price of eggs be? Explain your reasoning, and illustrate your reasoning by altering the graphs above. d. In the long run, how many eggs will the typical firm produce? e. In the long run, how many firms will comprise the industry?
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