Long-run equilibrium price in the economy.

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Answer 1

Question

Chapter 10, Problem 3SQP

(a):

To determine

Long-run equilibrium price in the economy.

(b):

To determine

Long-run equilibrium output in the economy.

(c):

To determine

The quantity at which the LRAC is at its minimum.

(d):

To determine

Long-run equilibrium price comparison with the marginal cost of producing the output.

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1. Riaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3 apples and 5 bread. The price of apple is $3 each, and the price of bread is $2.5 each. The last apple added 5 units to Sadid's utility, while the last bread added 7 units. Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's consumption bundle? Why or why not? Give reasons in support of your answer. State the condition for a consumer's utility maximizing choice and illustrate graphically. 2. Consider the following table of long-run total costs for three different firms: Quantity Total Cost ($) Firm A Firm B Firm C 1 60 11 21 2 70 24 34 3 80 39 49 4 90 56 66 5 100 75 85 6 110 96 106 7 120 119 129 Does each of these firms experience economies of scale or diseconomies of scale? Explain your answer with necessary calculations.

Riaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3 apples and 5 bread. The price of apple is $3 each, and the price of bread is $2.5 each. The last apple added 5 units to Sadid's utility, while the last bread added 7 units. Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's consumption bundle? Why or why not? Give reasons in support of your answer.State the condition for a consumer's utility maximizing choice and illustrate graphically.

1. Riaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3 apples and 5 bread. The price of apple is $3 each, and the price of bread is $2.5 each. The last apple added 5 units to Sadid's utility, while the last bread added 7 units. Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's consumption bundle? Why or why not? Give reasons in support of your answer. State the condition for a consumer's utility maximizing choice and illustrate graphically.

Answer 2

Question

Chapter 10, Problem 3SQP

(a):

To determine

Long-run equilibrium price in the economy.

(b):

To determine

Long-run equilibrium output in the economy.

(c):

To determine

The quantity at which the LRAC is at its minimum.

(d):

To determine

Long-run equilibrium price comparison with the marginal cost of producing the output.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 10, Problem 3SQP

(a):

To determine

Long-run equilibrium price in the economy.

(b):

To determine

Long-run equilibrium output in the economy.

(c):

To determine

The quantity at which the LRAC is at its minimum.

(d):

To determine

Long-run equilibrium price comparison with the marginal cost of producing the output.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 10, Problem 3SQP

(a):

To determine

Long-run equilibrium price in the economy.

(b):

To determine

Long-run equilibrium output in the economy.

(c):

To determine

The quantity at which the LRAC is at its minimum.

(d):

To determine

Long-run equilibrium price comparison with the marginal cost of producing the output.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 10, Problem 3SQP

(a):

To determine

Long-run equilibrium price in the economy.

(b):

To determine

Long-run equilibrium output in the economy.

(c):

To determine

The quantity at which the LRAC is at its minimum.

(d):

To determine

Long-run equilibrium price comparison with the marginal cost of producing the output.

Answer 6

Chapter 10, Problem 3SQP

(a):

To determine

Long-run equilibrium price in the economy.

Answer 7

Chapter 10, Problem 3SQP

(a):

To determine

Long-run equilibrium price in the economy.

Answer 8

(b):

To determine

Long-run equilibrium output in the economy.

Answer 9

(b):

To determine

Long-run equilibrium output in the economy.

Answer 10

(c):

To determine

The quantity at which the LRAC is at its minimum.

Answer 11

(c):

To determine

The quantity at which the LRAC is at its minimum.

Answer 12

(d):

To determine

Long-run equilibrium price comparison with the marginal cost of producing the output.

Answer 13

(d):

To determine

Long-run equilibrium price comparison with the marginal cost of producing the output.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 10.1 - Prob. 1YTE Ch. 10.5 - Prob. 1GE Ch. 10.6 - Prob. 1YTE Ch. 10 - Prob. 1SQP Ch. 10 - Prob. 2SQP Ch. 10 - Prob. 3SQP Ch. 10 - Prob. 4SQP Ch. 10 - Prob. 5SQP Ch. 10 - Prob. 6SQP Ch. 10 - Prob. 7SQP

Long-run equilibrium price in the economy.

Solution Summary: The author explains that the long-run equilibrium price in the economy is obtained at the intersection of the marginal cost curve and marginal revenue curve, and the quantity at which the LRAC is at its minimum.

Long-run equilibrium price in the economy.

Long-run equilibrium output in the economy.

The quantity at which the LRAC is at its minimum.

Long-run equilibrium price comparison with the marginal cost of producing the output.

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Chapter 10 Solutions