There are 136 firms in the industry for the good X above. We will assume that there are no fixed costs in this industry, and that therefore the short run and the long run are equivalent. The table below shows each firm’s production table for the relevant range of output. Assume the firm is a price taker in both the input (labor) and the output (production of X) markets. For the former, assume the wage rate is $1 an hour (this assumption is simply for ease of calculation). The equation of the regression line is P=34X-132. What is the equation of the market supply curve when each firm is producing at least 4 units of X, in the form of X=? x=136((P+132)/34)?In the long run, what do you expect the market price ($26?) and market supply to be (544 or 632?)?
Question
There are 136 firms in the industry for the good X above. We will assume that there are no fixed costs in this industry, and that therefore the short run and the long run are equivalent. The table below shows each firm’s production table for the relevant range of output.
Assume the firm is a
|
Quantity of X |
Labor Hours |
total Cost ($) |
|
Marginal cost =(10-8X+3X^2) |
|
1 |
7 |
7 |
7 |
5 |
|
2 |
12 |
12 |
6 |
6 |
|
3 |
21 |
21 |
7 |
13 |
|
4 |
40 |
40 |
10 |
26 |
|
5 |
75 |
75 |
15 |
45 |
|
6 |
132 |
132 |
22 |
70 |
|
7 |
217 |
217 |
31 |
101 |
|
8 |
336 |
336 |
42 |
138 |
|
9 |
495 |
495 |
55 |
181 |
|
10 |
700 |
700 |
70 |
230 |
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