An industry has 100 identical firms, each of which has a fixed cost of $16 and average variable cost as follows: Quantity 1 2 3 4 5 6 AVC $1 $2 $3 $4 $5 $6 a) Calculate each firm's MC and ATC b) How many quantities is each firm producing if market price is $10? What is the total industry output? c) Based on the current production decisions of firms engaged in this market, discuss the long run effects on number of firms, total industry output, and market price for this product in the future.

An industry has 100 identical firms, each of which has a fixed cost of $16 and average variable cost as follows: Quantity 1 2 3 4 5 6 AVC $1 $2 $3 $4 $5 $6 a) Calculate each firm's MC and ATC b) How many quantities is each firm producing if market price is $10? What is the total industry output? c) Based on the current production decisions of firms engaged in this market, discuss the long run effects on number of firms, total industry output, and market price for this product in the future.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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