Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
20th Edition
ISBN: 9780078021756
Author: McConnell, Campbell R.; Brue, Stanley L.; Flynn Dr., Sean Masaki
Publisher: McGraw-Hill Education
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Chapter 11, Problem 2P
To determine
Average Total Cost .
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Students have asked these similar questions
Suppose that each firm in a competitive industry has the following as the Total cost: TC=50+ ½q2
Where q is an individual firm’s quantity produced.
The market demand curve for this product is
Demand: Q = 120 – P
Where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market
What is each firm’s fixed cost? What is its variable cost?
At what quantity efficiency of scale would be achieved?
Give the equation for each firm’s supply curve
Give the equation for the market supply curve for the short run
What is the equilibrium price and quantity for this market in the short run?
In this equilibrium, how much does each firm produce? Is there incentive for firms to enter or exit?
In the long run with free entry and exit, what is the equilibrium price and quantity in this market?
In the long-run equilibrium, how many firms are in the market?
I want the subparts 4,5,6 to be solved. Thank you
Suppose that each firm in a competitive industry has the following as the Total cost: TC=50+ ½q2
Where q is an individual firm’s quantity produced.
The market demand curve for this product is
Demand: Q = 120 – P
Where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market
What is each firm’s fixed cost? What is its variable cost?
At what quantity efficiency of scale would be achieved?
Give the equation for each firm’s supply curve
Give the equation for the market supply curve for the short run
What is the equilibrium price and quantity for this market in the short run?
In this equilibrium, how much does each firm produce? Is there incentive for firms to enter or exit?
In the long run with free entry and exit, what is the equilibrium price and quantity in this market?
In the long-run equilibrium, how many firms are in the market?
PLEASE ANSWER WITH GRAPH: Suppose that an industry is initially at a long-run competitive equilibrium. Originally,
firms in the industry had very low fixed costs, but due to a new law, firms' fixed costs increased significantly. Throughout
all these changes, the industry remains competitive. Graphically show how this new law changes the industry in both the
short run and long run. To receive full credit, you must: Correctly show how the law changed the MC, AVC, ATC, LRS,
Demand and Short - Run Supply Curves (if at all). Correctly show profits at the firm level immediately after the new law
is put in place and in the long run. Correctly show how the market will adjust to the new long-run competitive
equilibrium. Clearly show how the long-run equilibrium market quantity and market price
Chapter 11 Solutions
Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
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- If there were 60 firms in this market, the short-run equilibrium price of titanium would be $________ per kilogram. At that price, firms in this industry would (earn a positive profit, shut down, earn zero profit, operate at a loss). Therefore, in the long run, firms would ( enter, exit, neither enter nor exit) the titanium market. Because you know that perfectly competitive firms earn (positive, zero, negative) economic profit in the long run, you know the long-run equilibrium price must be $_______ per kilogram. From the graph, you can see that this means there will be (20, 40, 60) firms operating in the titanium industry in long-run equilibrium.arrow_forwardSuppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + 0.5Q^2The market demand curve for this product is: Qd= 120 −PThere are 9 firms in the market.a) What are each firm’s: fixed cost, variable cost, marginal cost, and average total cost? Graph the average-total-cost curve and the marginal-cost curve.b) Give the equation for each firm’s supply curve.the average-total-cost curve at its minimum? What is marginal cost and average totalc) Give the equation for the market supply curve for the short run in which the numbercost at that quantity?arrow_forwardWhat is the firm’s corresponding average total cost (ATC) per unit produced?arrow_forward
- Suppose that the perfectly competitive firm with the costs and revenues shown in the figure to the right is contemplating whether or not to produce 12 units of output. If the firm were to produce the 12th unit and, in doing so, increase its hourly total costs to $68 from $56, what would be its marginal cost? Would producing 12 units maximize the firm's profits? What would be the firm's total revenues per hour? What would be its hourly economic profits? If it were to produce the 12th unit, the firm's marginal cost would be MC = $ nothing per unit. Since the market price is P = $ nothing per unit and this price ▼ is larger than equals is less than the firm's marginal revenue, marginal cost ▼ is less than is larger than equals marginal revenue, and producing the 12th unit ▼ would would not satisfy the profit-maximizing rule. The firm's total revenue would equal $ nothing per hour and economic profits would equal $ nothing per hour. (Enter your responses as whole…arrow_forwardConsider the perfectly competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. 100 90 80 70 60 50 40 АТС 30 20 AVC 10 MC O 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of pounds) COSTS (Dollars per pound)arrow_forwardSuppose there are 7 firms in this industry, each of which has the cost curves previously shown.arrow_forward
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