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.

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

Problem 10PA

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