Newsprint (the paper used for newspapers) is produced in a perfectly competitive market. Each identical firm has a total cost TC(Q)=72+40Q + 0.5Q2, with an associated marginal cost curve SMC(Q) = 40 + Q. Each firm's fixed cost is entirely non-sunk. a) Calculate the price below which the firm will not produce any output in the short run. b) Assume that there are 10 identical firms in the industry. Find the market level supply curve. c) Currently, the market demand for newsprint is D(P) = 380 - 2P, where D(P) is the quantity demanded in the market when the price is P. What is the short-run equilibrium price?

Newsprint (the paper used for newspapers) is produced in a perfectly competitive market. Each identical firm has a total cost TC(Q)=72+40Q + 0.5Q2, with an associated marginal cost curve SMC(Q) = 40 + Q. Each firm's fixed cost is entirely non-sunk. a) Calculate the price below which the firm will not produce any output in the short run. b) Assume that there are 10 identical firms in the industry. Find the market level supply curve. c) Currently, the market demand for newsprint is D(P) = 380 - 2P, where D(P) is the quantity demanded in the market when the price is P. What is the short-run equilibrium price?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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