Question

Consider the following set of cost equations for each firm in a perfectly competitive market: Let...

Consider the following set of cost equations for each firm in a perfectly competitive market:

Let x represents units of output

Marginal Cost = 4x + 6

Average Total Cost = 2x + 6 + (24 / x)

Suppose the market price is equal to $18

Determine the level of profit-maximizing output for the firm in this market. (1 Mark)

Max 250 characters

2. Consider the following set of cost equations for each firm in a perfectly competitive market:

Let x represents units of output

Marginal Cost = 4x + 6

Average Total Cost = 2x + 6 + (24 / x)

Suppose the market price is equal to $18

Determine the level of economic profit earned by each firm in this market. (1 Mark)

Max 250 characters

3. Consider the following set of cost equations for each firm in a perfectly competitive market:

Let x represents units of output

Marginal Cost = 4x + 6

Average Total Cost = 2x + 6 + (24 / x)

Suppose the market price is equal to $18

Suppose also that the market demand is given by the equation: Price = -x + 48

Determine the number of firms that operate in this market. (1 Mark)

Max 250 characters

4. Consider the following set of cost equations for each firm in a perfectly competitive market:

Let x represents units of output

Marginal Cost = 4x + 6

Average Total Cost = 2x + 6 + (24 / x)

Suppose the market price is equal to $18

Suppose also that the market demand is given by the equation: Price = -x + 48

Suppose now that some firms exit the market and the new market price is equal to $22

Calculate the new level of profit-maximizing output for each firm in this market. (1 Mark)

Max 250 characters

5. Consider the following set of cost equations for each firm in a perfectly competitive market:

Let x represents units of output

Marginal Cost = 4x + 6

Average Total Cost = 2x + 6 + (24 / x)

Suppose the market price is equal to $18

Suppose also that the market demand is given by the equation: Price = -x + 48

Suppose now that some firms exit the market and the new market price is equal to $22

Is this market now in long-run equilibrium? (1 Mark)

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