Suppose all firms in a given industry have the same supply curve given by S,(p)p/4. Plot and label the four industry supply curves generated by these firms if there are 1, 2, 3, or 4 firms operating in the industry. (a) If all of the firms had a cost structure such that if the price was below $4, they would be losing money, what would be the equilibrium price and output in the industry in the long run if the market demand was D(p) 2.5? How many firms would exist in such a market? Why? (b) What if the identical conditions as above held except that the market demand was equal to D(p) 7.5-p? Now, what would be the equilibrium price and output? How many firms would operate in such a market?

Suppose all firms in a given industry have the same supply curve given by S,(p)p/4. Plot and label the four industry supply curves generated by these firms if there are 1, 2, 3, or 4 firms operating in the industry. (a) If all of the firms had a cost structure such that if the price was below $4, they would be losing money, what would be the equilibrium price and output in the industry in the long run if the market demand was D(p) 2.5? How many firms would exist in such a market? Why? (b) What if the identical conditions as above held except that the market demand was equal to D(p) 7.5-p? Now, what would be the equilibrium price and output? How many firms would operate in such a market?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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