Suppose that the monthly market demand schedule for Frisbees is: Price Quantity Demande d $8 $7 $6 $5 $4 800 $3 1,600 $2 $1 100 150 200 400 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 Average Cost бо 40 $2.00 $3.00 $4.00 | $5.00 $6.00 $7.00 $2.00 $2.25 $2.75 $3.00 $4.50 $6.00 20 30 50 Finally, assume that the equilibrium market price is $5 per Frisbee. (а) (b) (c) How many Frisbees are being sold in equilibrium? How many (identical) firms are initially producing Frisbees? How much profit is the typical firm making?
Suppose that the monthly market demand schedule for Frisbees is: Price Quantity Demande d $8 $7 $6 $5 $4 800 $3 1,600 $2 $1 100 150 200 400 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 Average Cost бо 40 $2.00 $3.00 $4.00 | $5.00 $6.00 $7.00 $2.00 $2.25 $2.75 $3.00 $4.50 $6.00 20 30 50 Finally, assume that the equilibrium market price is $5 per Frisbee. (а) (b) (c) How many Frisbees are being sold in equilibrium? How many (identical) firms are initially producing Frisbees? How much profit is the typical firm making?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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(a) How many Frisbees are being sold in equilibrium?
(b) 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
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