Consider the file Short Run & Long Run and ignore everything that happened in the previous two questions. Start from the beginning. Assume that this is a decreasing-cost industry. Suppose that the demand for this product increases by 1,200 units and stays at this higher level for ever. In the long run, as new firms enter the industry, some technological progress takes place and as a result the average cost of production decrease by 8 dollars (The ATC curve shifts down vertically by $8). Then, in the long run, the equilibrium price of the product will equal 8.00 4200.00 dollars per unit, the equilibrium quantity units, and there will be 11.00 firms in the industry each making an economic profit of 40.00 dollars. $72 $68 $64 $60 $56 $52 $48 $44 $40 $36 $32 $28 $24 $20 $16 $12 $8 $4 1.500 방법 1.800 2,100 2.400 2,700 3,000 3.300 3,600 3,900 4.200 4,500 방법 Market Supply and Demand Functions $72 $68 $64 $60 $56 $52 $48 $44 $40 $36 $32 $28 $24 $20 $16 $12 $8 02 4 6 8 10 12 14 16 18 20 Cost Functions for a Typical Firm in the Industry

Consider the file Short Run & Long Run and ignore everything that happened in the previous two questions. Start from the beginning. Assume that this is a decreasing-cost industry. Suppose that the demand for this product increases by 1,200 units and stays at this higher level for ever. In the long run, as new firms enter the industry, some technological progress takes place and as a result the average cost of production decrease by 8 dollars (The ATC curve shifts down vertically by $8). Then, in the long run, the equilibrium price of the product will equal 8.00 4200.00 dollars per unit, the equilibrium quantity units, and there will be 11.00 firms in the industry each making an economic profit of 40.00 dollars. $72 $68 $64 $60 $56 $52 $48 $44 $40 $36 $32 $28 $24 $20 $16 $12 $8 $4 1.500 방법 1.800 2,100 2.400 2,700 3,000 3.300 3,600 3,900 4.200 4,500 방법 Market Supply and Demand Functions $72 $68 $64 $60 $56 $52 $48 $44 $40 $36 $32 $28 $24 $20 $16 $12 $8 02 4 6 8 10 12 14 16 18 20 Cost Functions for a Typical Firm in the Industry

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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