In view of the profits being made, more firms will want to get into Frisbee production. In the long run, these new firms will shift the market supply curve to the right and push the price down to average total cost, thereby eliminating profits. At what equilibrium price are all profits eliminated? How many firms will be producing Frisbees at this price? Chapter 6Q10: (15%)Suppose that the monthly market demand schedule for Frisbees is:Price$4800$31,600$8$7$6$5$2$1QuantityDemanded1001502004003,0007,500Suppose further that the marginal and average costs of Frisbee productionfor every competitive firm areRate of Output | 10Marginal Cost $2.00 $3.0o $4.00 $5.00 $6.00 $7.00Average Cost2030405060$2.00$2.25 $2.75 $3.00 $4.5o $6.00Finally, assume that the equilibrium market price is $5 per Frisbee.(а)(b)(c)(d)How many Frisbees are being sold in equilibrium?How many (identical) firms are initially producing Frisbees?How much profit is the typical firm making?In view of the profits being made, more firms will want to get intoFrisbee production. In the long run, these new firms will shift themarket supply curve to the right and push the price down to averagetotal cost, thereby eliminating profits. At what equilibrium price areall profits eliminated? How many firms will be producing Frisbees atthis price?

Long-run equilibrium is where marginal cost equals average cost equals price. Total number of firms…

Answered: In view of the profits being made, more…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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In view of the profits being made, more firms will want to get into Frisbee production. In the long run, these new firms will shift the market supply curve to the right and push the price down to average total cost, thereby eliminating profits. At what equilibrium price are all profits eliminated? How many firms will be producing Frisbees at this price?

Chapter 6
Q10: (15%)
Suppose that the monthly market demand schedule for Frisbees is:
Price
$4
800
$3
1,600
$8
$7
$6
$5
$2
$1
Quantity
Demande
d
100
150
200
400
3,000
7,500
Suppose further that the marginal and average costs of Frisbee production
for every competitive firm are
Rate of Output | 10
Marginal Cost $2.00 $3.0o $4.00 $5.00 $6.00 $7.00
Average Cost
20
30
40
50
60
$2.00
$2.25 $2.75 $3.00 $4.5o $6.00
Finally, assume that the equilibrium market price is $5 per Frisbee.
(а)
(b)
(c)
(d)
How many Frisbees are being sold in equilibrium?
How many (identical) firms are initially producing Frisbees?
How much profit is the typical firm making?
In view of the profits being made, more firms will want to get into
Frisbee production. In the long run, these new firms will shift the
market supply curve to the right and push the price down to average
total cost, thereby eliminating profits. At what equilibrium price are
all profits eliminated? How many firms will be producing Frisbees at
this price?

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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