ndustry X has a market demand curve given by the equation P = 100 – Q/100, where P is the market price, and Q is industry-wide output.100 perfectly competitive firms currently operate in industry X. Each of these firms has a total cost function given by TC = 100 + 10q + q2, where q is the output of the individual firm, and thus MC = 10 + 2q. (a) Would any of the firms in industry X ever shut down in the short run? If so, what is the cut-off price required for firms to operate – Shut-down price? (b) What is the market output in the short run? What is the market price? How much do individual firms produce? Do firms earn economic profits? [Hint: you will first need to work out the industry supply curve.]
Industry X has a market demand curve given by the equation P = 100 – Q/100, where P is the market
(a) Would any of the firms in industry X ever shut down in the short run? If so, what is the cut-off price required for firms to operate – Shut-down price?
(b) What is the market output in the short run? What is the market price? How much do individual firms produce? Do firms earn economic profits? [Hint: you will first need to work out the industry supply curve.]
*Note: when finding answers for this question online, they wrote to first find the
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
