The market for apples is perfectly competitive and currently has 400 identical firms. Each firm has fixed costs of $16 and average variable costs given below: Quantity Average Variable Cost 1 $1 2 $2 3 $3 4 $4 5 $5 6 $6 7 $7 a) The equilibrium price is currently $11. How much does each firm produce in order to profit maximize and what is the total quantity supplied in the market? b) As the market transitions to long-run equilibrium, will the price of app;es fall or will it rise? Explain.
The market for apples is perfectly competitive and currently has 400 identical firms. Each firm has fixed costs of $16 and average variable costs given below: Quantity Average Variable Cost 1 $1 2 $2 3 $3 4 $4 5 $5 6 $6 7 $7 a) The equilibrium price is currently $11. How much does each firm produce in order to profit maximize and what is the total quantity supplied in the market? b) As the market transitions to long-run equilibrium, will the price of app;es fall or will it rise? Explain.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: Firms In Competitive Markets
Section: Chapter Questions
Problem 10PA
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. The market for apples is
Quantity |
Average Variable Cost |
1 |
$1 |
2 |
$2 |
3 |
$3 |
4 |
$4 |
5 |
$5 |
6 |
$6 |
7 |
$7 |
a) The
b) As the market transitions to long-run equilibrium, will the price of app;es fall or will it rise? Explain.
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