The market for smoothies is perfectly competitive and the market demand schedule is in the first two columns in the below table. Each of the 100 producers of smoothies has the costs given in columns 3-6 when it uses its least-cost plant. What is the market price of a smoothie? $5.25 $1.25 Market demand schedule Quantity demanded (smoothies per hour) 1,000 Price (dollars per smoothie) 1.90 2.00 2.20 2.91 4.25 5.25 5.50 950 800 700 550 400 300 Output (smoothies per hour) 3 4 5 6 7 8 9 Producers of smoothies Costs Marginal cost (dollars per additional smoothie) 2.50 2.20 1.90 2.00 2.91 4.25 8.00 Average variable cost (dollars per smoothie) 4.00 3.53 3.24 3.00 2.91 3.00 Average total cost 3.33 7.33 6.03 5.24 4.67 4.34 4.25 4.44

The market for smoothies is perfectly competitive and the market demand schedule is in the first two columns in the below table. Each of the 100 producers of smoothies has the costs given in columns 3-6 when it uses its least-cost plant. What is the market price of a smoothie? $5.25 $1.25 Market demand schedule Quantity demanded (smoothies per hour) 1,000 Price (dollars per smoothie) 1.90 2.00 2.20 2.91 4.25 5.25 5.50 950 800 700 550 400 300 Output (smoothies per hour) 3 4 5 6 7 8 9 Producers of smoothies Costs Marginal cost (dollars per additional smoothie) 2.50 2.20 1.90 2.00 2.91 4.25 8.00 Average variable cost (dollars per smoothie) 4.00 3.53 3.24 3.00 2.91 3.00 Average total cost 3.33 7.33 6.03 5.24 4.67 4.34 4.25 4.44

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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