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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