2. Consider a perfectly competitive industry where each firm has the cost structure described above. The industry supplies machines for the market with market demand D: P = 1900 - Q. a. Find the profit maximizing quantity q* each firm chooses to produce at the market price P = $1,320. Calculate economic profit of a firm. Find the market demand and calculate the number of firms in the market Repeat the above exercise for the market price P = $720. c. Repeat the above exercise for the market price P = $620. d. Repeat the above exercise for the market price P = $190. b. e. In the graph you developed in part 1.b. above, show a typical firm in the long run equilibrium. f. In a separate graph, show the market demand and market supply (approximately) in the long run equilibrium.

2. Consider a perfectly competitive industry where each firm has the cost structure described above. The industry supplies machines for the market with market demand D: P = 1900 - Q. a. Find the profit maximizing quantity q* each firm chooses to produce at the market price P = $1,320. Calculate economic profit of a firm. Find the market demand and calculate the number of firms in the market Repeat the above exercise for the market price P = $720. c. Repeat the above exercise for the market price P = $620. d. Repeat the above exercise for the market price P = $190. b. e. In the graph you developed in part 1.b. above, show a typical firm in the long run equilibrium. f. In a separate graph, show the market demand and market supply (approximately) in the long run equilibrium.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter22: Supply: The Costs Of Doing Business

Section: Chapter Questions

Problem 14E

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