Price Quantity Demanded $1 1,200 pies 2 1,100 3 1,000 4 900 800 6 700 7 600 8 500 9 400 10 300 11 200 12 100 13 Each producer in the market has fixed costs of $9 and the following marginal cost: Quantity Marginal Cost 1 pie $2 2 4 3 6 5 10 12 %24
TI,c market for apple pies in the city of F.ctenia is competitive and has the following demand schedule;
a. Compute each producer's total cost and average
total cost for l to 6 pies.
b. The price of a pie is now SIL How many pies are
sold? How many pies docs each producer make?
How many producers are there? How much profit
docs each producer earn?
c. ls the situation d escribed in part (bl a long-run
equilibrium? Why or why not?
d. Suppose tha t in the Jong run there is free entry
and exit. How much profit does each producer
earn in the Jong-run equilibrium? Wha t is the
market price? How many pies docs each producer
make? How many p ies are sold in the market?
How many pie producers arc operating?
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