Suppose that wood industry is a perfectly competitive industry that involves240 identical firms. The production function of each of these identical firms isas followsq = KLZwhere K denotes capital and L denotes labor with the correspondingprices: P = 12 and P, = 9. Suppose that capital is fixed K=3 and marketdemand function is given as follows:%3DQ' = 2,000 -80PWhat is the economic profit at the equilibrlum, respectively?economic profit of $14economiE profit of $25economic loss of $11zero economic profit

Firms in perfect competition are price takers meaning they sell output at the point where price…

Suppose that wood industry is a perfectly competitive industry that involves 240 identical firms. The production function of each of these identical firms is as follows: q = KLZ where K denotes capital and L denotes labor with the corresponding prices: P demand function is given as follows: 12 and P, 9, Suppose that capital is fixed K-3 and market %3D Q" = 2,000 -80P What is the economic profit at the equilibrlum, respectively? economic profit of $14 economie profit of $25 economic loss of $11 zero economic profit

Suppose that wood industry is a perfectly competitive industry that involves 240 identical firms. The production function of each of these identical firms is as follows: q = KLZ where K denotes capital and L denotes labor with the corresponding prices: P demand function is given as follows: 12 and P, 9, Suppose that capital is fixed K-3 and market %3D Q" = 2,000 -80P What is the economic profit at the equilibrlum, respectively? economic profit of $14 economie profit of $25 economic loss of $11 zero economic profit

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Imagine a perfectly competitive wood industry composed of 240 identical firms. The production output, q for each firm is determined by the function 9 = K1/2* L¹1/2, where K represents capital and L stands for labor. The $25 and PL prices for capital and labor are PK = $4, respectively. With labor fixed at 25 units, and the market demand described by Qd = 260 2P, what would be the economic profit or loss at equilibrium for these firms? -98 -99 99 98 = =
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