Suppose the market demand for milk is Qd=150-5P. Additionally, suppose that a dairy's variable costs are VC=2Q2 (where Q is the number of gallons of milk produced each day), and there is an avoidable fixed cost of $50 per day. In the long run there is free entry into the market.
How much does each firm produce?
a.
20
b.
10
c.
5
d.
50
What is the equation for the Market supply curve?
a. |
Qsmarket=4P |
|
b. |
Qsmarket=2.5P |
|
c. |
Qsmarket=50P |
|
d. |
Qsmarket=10P |
How many active firms are in the market?
a. |
5 |
|
b. |
20 |
|
c. |
10 |
|
d. |
50 |
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