The Android phone market is highly competitive since there is a large number of companies and potential entrants. For simplicity, assume each firm has an identical cost structure, and the cost does not change with new firms’ entry. Each firm’s long-run average cost is minimized at 300 and the minimum average cost is $150 per unit. Total market demand is given by Q = 15,000 − 50P. a. What is the Android phone market’s long-run supply curve? b. What is the long-run equilibrium price (P∗) and total industry output (Q∗)? How many companies are competing in this market? c. The short-run total cost curve for each firm is given by STC = 0.5q^2 − 150q + 20000, where q is the firm’s production quantity. Find the short-run marginal cost (SMC) for each firm. What is the market short-run supply curve? d. Suppose Android phone has become more popular and the market demand curve shifts outward to Q = 20,000 − 50P. In the *short-run*, find the new equilibrium price. What is the new equilibrium price in the long run?
The Android phone market is highly competitive since there is a large number of companies and potential entrants. For simplicity, assume each firm has an identical cost structure, and the cost does not change with new firms’ entry. Each firm’s long-run average cost is minimized at 300 and the minimum average cost is $150 per unit. Total market demand is given by Q = 15,000 − 50P. a. What is the Android phone market’s long-run supply curve? b. What is the long-run equilibrium price (P∗) and total industry output (Q∗)? How many companies are competing in this market? c. The short-run total cost curve for each firm is given by STC = 0.5q^2 − 150q + 20000, where q is the firm’s production quantity. Find the short-run marginal cost (SMC) for each firm. What is the market short-run supply curve? d. Suppose Android phone has become more popular and the market demand curve shifts outward to Q = 20,000 − 50P. In the *short-run*, find the new equilibrium price. What is the new equilibrium price in the long run?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The Android phone market is highly competitive since there is a large number of
companies and potential entrants. For simplicity, assume each firm has an identical cost
structure, and the cost does not change with new firms’ entry. Each firm’s long-run average cost
is minimized at 300 and the minimum average cost is $150 per unit. Total market demand is
given by
Q = 15,000 − 50P.
a. What is the Android phone market’s long-run supply curve?
companies and potential entrants. For simplicity, assume each firm has an identical cost
structure, and the cost does not change with new firms’ entry. Each firm’s long-run average cost
is minimized at 300 and the minimum average cost is $150 per unit. Total market demand is
given by
Q = 15,000 − 50P.
a. What is the Android phone market’s long-run supply curve?
b. What is the long-run equilibrium price (P∗) and total industry output (Q∗)? How
many companies are competing in this market?
c. The short-run total cost curve for each firm is given by STC = 0.5q^2 − 150q +
20000, where q is the firm’s production quantity. Find the short-run marginal cost
(SMC) for each firm. What is the market short-run supply curve?
d. Suppose Android phone has become more popular and the market demand
curve shifts outward to Q = 20,000 − 50P. In the *short-run*, find the new equilibrium
price. What is the new equilibrium price in the long run?
many companies are competing in this market?
c. The short-run total cost curve for each firm is given by STC = 0.5q^2 − 150q +
20000, where q is the firm’s production quantity. Find the short-run marginal cost
(SMC) for each firm. What is the market short-run supply curve?
d. Suppose Android phone has become more popular and the market demand
curve shifts outward to Q = 20,000 − 50P. In the *short-run*, find the new equilibrium
price. What is the new equilibrium price in the long run?
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