Consider the following costs of a typical firm in a purely competitive industry. The firm has no fixed costs (average total cost = average variable cost). Average Total Cost Quantity Marginal Cost 1 $28.00 2 20.50 $13.00 3 16.67 9.00 4 15.25 11.00 16.00 19.00 6 18.83 33.00 a. Given only the information available, what would you expect product price to be in the long run? O $11.00 O $19.00 O $16.00 O $15.25 b. What would you expect price to be in the short run? O $9.00 O $13.00 O $11.00 O $19.00

Consider the following costs of a typical firm in a purely competitive industry. The firm has no fixed costs (average total cost = average variable cost). Average Total Cost Quantity Marginal Cost 1 $28.00 2 20.50 $13.00 3 16.67 9.00 4 15.25 11.00 16.00 19.00 6 18.83 33.00 a. Given only the information available, what would you expect product price to be in the long run? O $11.00 O $19.00 O $16.00 O $15.25 b. What would you expect price to be in the short run? O $9.00 O $13.00 O $11.00 O $19.00

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The accompanying graph depicts the cost curves of an individual firm in a perfectly (or purely) competitive industry.