Widget is a commodity that is traded in a perfectly competitive global market that consists of many small price-taking firms. The firms fall in three categories with the following characteristics: Number of firms Type 25 1 Type 50 2 Type 100 3 Capacity of firm's plant (units AVC ($ per Fixed cost per unit at full per year) unit) capacity ($/unit) 100 units 30 50 units 40 units 40 45 15 20 25 Capital charge per unit at full capacity ($/unit) 10 10 10 Assume that each firm's AVC is constant up to the capacity of its plant. Further, assume that once built, a firm's plant has zero redeployment value. Finally, assume that a typical entrant has a cost structure identical to the Type 1 firms and that there are many potential entrants. The demand for widgets is Q = 8000-20P, where P is $ per unit and Q is measured in units per year. (Remember: use only whole numbers, and do not use any other characters or spaces.) a. The short-run equilibrium price in the world widgets market is: b. The short-run equilibrium quantity in the world widgets market is: c. The combined equilibrium quantity of widgets supplied by Type 1 firms is:

Widget is a commodity that is traded in a perfectly competitive global market that consists of many small price-taking firms. The firms fall in three categories with the following characteristics: Number of firms Type 25 1 Type 50 2 Type 100 3 Capacity of firm's plant (units AVC ($ per Fixed cost per unit at full per year) unit) capacity ($/unit) 100 units 30 50 units 40 units 40 45 15 20 25 Capital charge per unit at full capacity ($/unit) 10 10 10 Assume that each firm's AVC is constant up to the capacity of its plant. Further, assume that once built, a firm's plant has zero redeployment value. Finally, assume that a typical entrant has a cost structure identical to the Type 1 firms and that there are many potential entrants. The demand for widgets is Q = 8000-20P, where P is $ per unit and Q is measured in units per year. (Remember: use only whole numbers, and do not use any other characters or spaces.) a. The short-run equilibrium price in the world widgets market is: b. The short-run equilibrium quantity in the world widgets market is: c. The combined equilibrium quantity of widgets supplied by Type 1 firms is:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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