Answered: Assume that the price on the market…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Start from a market with perfect competition.

For a representative producer, the long-term marginal cost is given by

LMC=9Q2−20Q+50LMC=9Q2−20Q+50

and the long-term total cost function is

LTC=3Q3−10Q2+50QLTC=3Q3−10Q2+50Q

Assume that the price on the market right now is SEK 50.

a) How much profit or loss does the producer make in the initial situation?

b) Describe in detail what will happen in the market and why

c) What will the equilibrium price be?

d) how much will our producer produce at market equilibrium?

Definition Video Formula Definition Phenomenon in which market supply and demand balance each other. Market equilibrium is the economic state in which the market demand curve intersects the market supply curve, giving us the equilibrium price and equilibrium quantity for which a commodity can be sold and purchased in an economy. When market equilibrium is achieved, it suggests that all resources have been allocated efficiently and that there is just a distribution of income and resources in the economy. Video Formula

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