Question 16The market is perfectly competitive and there are 1,000 firms that produce paper. A table below sets out the market demandschedule for paper and cost schedule for paper producing firm when it uses its least-cost plant.Price(dollars perbox)5.50lei6.808.109.4010.70Market Quantitydemanded (boxesper week)400,000350,000300,000270,000240,000Each Firm'sOutput(boxes perweek)210230250270290Marginal cost(dollars peradditional box)b) What is the number of firms in the long run?6.007.208.109.4012.40Averagevariable cost(dollars perbox)6.506.406.607.509.00Averagetotal cost(dollars perbox)11.009.208.108.9010.20a) Would firms make economic profit or incur economic loss in the short run? Explain why and calculate the total economicprofit or economic loss.

A perfectly competitive firm in the short-run produces at P=MC, and MC should be rising after that.…

The market is perfectly competitive and there are 1,000 firms that produce paper. A table below sets out the market demand schedule for paper and cost schedule for paper producing firm when it uses its least-cost plant.

The market is perfectly competitive and there are 1,000 firms that produce paper. A table below sets out the market demand schedule for paper and cost schedule for paper producing firm when it uses its least-cost plant.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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