Table 3 given in the following page describes the long run cost schedules for a typical firm in a given industry operating under perfect competition and without positive or negative external economies. Table 4 gives the demand schedule for the product of this industry. a) Fill out the missing entries in the table b) Plot the long run average total cost and marginal cost curves for the typical firm. Plot the supply curve for the typical firm on a second diagram. Plot the demand schedule for the whole industry on a third diagram. c) Currently the number of firms in the industry is 16. They all enjoy the same cost schedules given in Table 3. What is the equilibrium price? (Hint construct the market supply curve and plot it on the same diagram as the demand curve) d) What will happen to the number of firms in the long run? What are the basic economic forces and the characteristics of competitive markets that justify your answer? e) What is the long run equilibrium price and long run equilibrium quantity demanded and supplied? What is the number of firms at the long run equilibrium? Table 3 Cost Schedule for one firm Quantity MC ATC TC 0 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 8 8.5 ඒ 26 17 13.25 10 7.25 5 3.25 2 1.25 1 1.25 2 3.25 5 7.25 10 13.25 9 17 9.5 21.25 10 10.5 26 31.25 0 21.33 28.87 34.66 38.95 42 44.0 45.33 46.12 46.66 47.20 48 49.29 51.33 54.37 58.66 64.45 72 81.54 93.33 107.62 Table 4 Demand Quantity Price 0 26 24.75 23.5 22.25 21 19.75 18.5 17.25 16 10 20 30 40 50 60 70 80 90 100 110 120 128 140 150 160 170 180 190 200 14.75 13.5 12.25 11 10 8.5 7.25 6 4.75 3.5 2.25 1 3
Table 3 given in the following page describes the long run cost schedules for a typical firm in a given industry operating under perfect competition and without positive or negative external economies. Table 4 gives the demand schedule for the product of this industry. a) Fill out the missing entries in the table b) Plot the long run average total cost and marginal cost curves for the typical firm. Plot the supply curve for the typical firm on a second diagram. Plot the demand schedule for the whole industry on a third diagram. c) Currently the number of firms in the industry is 16. They all enjoy the same cost schedules given in Table 3. What is the equilibrium price? (Hint construct the market supply curve and plot it on the same diagram as the demand curve) d) What will happen to the number of firms in the long run? What are the basic economic forces and the characteristics of competitive markets that justify your answer? e) What is the long run equilibrium price and long run equilibrium quantity demanded and supplied? What is the number of firms at the long run equilibrium? Table 3 Cost Schedule for one firm Quantity MC ATC TC 0 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 8 8.5 ඒ 26 17 13.25 10 7.25 5 3.25 2 1.25 1 1.25 2 3.25 5 7.25 10 13.25 9 17 9.5 21.25 10 10.5 26 31.25 0 21.33 28.87 34.66 38.95 42 44.0 45.33 46.12 46.66 47.20 48 49.29 51.33 54.37 58.66 64.45 72 81.54 93.33 107.62 Table 4 Demand Quantity Price 0 26 24.75 23.5 22.25 21 19.75 18.5 17.25 16 10 20 30 40 50 60 70 80 90 100 110 120 128 140 150 160 170 180 190 200 14.75 13.5 12.25 11 10 8.5 7.25 6 4.75 3.5 2.25 1 3
Chapter8: Perfect Competition
Section: Chapter Questions
Problem 7.15P
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Transcribed Image Text:Table 3 given in the following page describes the long run cost schedules for a typical firm in a given
industry operating under perfect competition and without positive or negative external economies.
Table 4 gives the demand schedule for the product of this industry.
a) Fill out the missing entries in the table
b) Plot the long run average total cost and marginal cost curves for the typical firm. Plot the supply
curve for the typical firm on a second diagram. Plot the demand schedule for the whole industry
on a third diagram.
c) Currently the number of firms in the industry is 16. They all enjoy the same cost schedules given
in Table 3. What is the equilibrium price? (Hint construct the market supply curve and plot it on the
same diagram as the demand curve)
d) What will happen to the number of firms in the long run? What are the basic economic forces and
the characteristics of competitive markets that justify your answer?
e) What is the long run equilibrium price and long run equilibrium quantity demanded and supplied?
What is the number of firms at the long run equilibrium?
Table 3
Cost Schedule for one firm
Quantity MC ATC
TC
Or
0
1
1.5 13.25
223344556677
2.5
3.5
4.5
5.5
6.5
7.5
8
。066∞∞
26
17
9
9.5
29
10
7.25
5
3.25
2
1.25
1
1.25
235
10
8.5 13.25
3.25
7.25
63722
17
21.25
10
26
10.5 31.25
0
21.33
28.87
34.66
38.95
42
44.0
45.33
46.12
46.66
47.20
48
49.29
51.33
54.37
58.66
64.45
72
81.54
93.33
107.62
Table 4
Demand
Quantity Price
0
10
20
30
40
50
60
70
80
90
100
110
120
128
140
150
160
170
180
190
200
26
24.75
23.5
22.25
21
19.75
18.5
17.25
16
14.75
13.5
12.25
11
10
8.5
7.25
6
4.75
3.5
2.25
1
3
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