Question

A perfectly competitive industry consists of many identical firms, each with a long-run total cost of LTC = 800Q – 10Q^2 + 0.1Q^3.

a. In long-run equilibrium, how much will each firm produce?

b. What is the long-run equilibrium price?

c. The industry's demand curve is QD = 40,000 – 70P. How many units do consumers buy in long-run equilibrium? How many firms are in the industry?

d. Suppose the industry's demand curve rises to QD = 40,600 – 70P. How many new firms will enter this constant-cost industry in the long run?

Answer #1

10. The widget industry is perfectly
competitive. The lowest point on the long-run average cost curve of
each of the identical widget producers is K4, and this minimum
point occurs at an output of 1,000 widgets per month. When the
optimal scale of a firm’s plant is operated to produce 1, 150
widgets per month, the short run average cost of each
firm is K5. The market demand curve for widgets Is.
QD = 150, 000 – 5,000 P
Where...

Suppose a perfectly competitive market consists of identical
firms with the same cost function given by
C(q)=2q2 +3q + 400
The market demand is
QD= 5800 - 4p
How many firms will operate in this market in the long
run?
Round your answer to the nearest whole number.

11. Kites are manufactured by identical firms in a perfectly
competitive environment. Each firm’s long run average cost and
marginal cost of production are given by:
AC = Q + 100/Q and MC = 2Q where Q is the number of kites
produced.
a) In long run equilibrium, how many kites will each firm
produce? (2 pts)
b) What will the price of kites (P) be? (1 pt)
c) Suppose the demand for kites is given by formula Q =...

Suppose a representative firm in a perfectly competitive
industry has the following total cost of
production in the short run: TC = Q3 - 60Q2 +
3000Q.
a) What will be the long run equilibrium quantity for the firm?
What will be the long run
equilibrium price in this industry?
b) If the industry demand is given by QD = 12400 -
4P. how many firms will be active in the long-
run equilibrium?
c) Suppose the firm faces a...

The long run cost function for each (identical) firm in a
perfectly competitive market is C(q) =
q1.5 + 16q0.5 with long run
marginal cost given by LMC = 1.5q0.5 +
8q-0.5, where q is a firm’s
output. The market demand curve is Q = 1600 –
2p, where Q is the total output of all
firms and p is the price of output.
(a) Find the long run average cost curve for the firm. Find the
price of output and the amount of output...

3.Assume that in a different competitive industry, there are 8
firms, each with a marginal cost equal toMC = 20-10q +q2Average
cost is minimized at q = 10 and AVC is minimized at q = 8 for each
of these firms. Demand for the product is QD= 100-P
a.Is this industry in long-run competitive equilibrium? Explain
your answer.
b.A new trade policy will open this industry to foreign
competition for the first time. The world price is $10 (i.e., there...

Question 3
The long run cost function for each (identical) firm in a
perfectly competitive market is C(q) =
q1.5 + 16q0.5 with long run
marginal cost given by LMC = 1.5q0.5 +
8q-0.5, where q is a firm’s
output. The market demand curve is Q = 1600 –
2p, where Q is the total output of all
firms and p is the price of output.
(a) Find the long run average cost curve for the firm. Find the
price of output and the amount...

3: For each (identical) firm in a perfectly competitive market
the long-run cost function is C(q) = q1.5 + 16q0.5 with long run
marginal cost being LMC = 1.5q0.5 + 8q-0.5, where q = firm’s
output. Market demand curve: Q = 1600 – 2p, where Q = total output
of all firms, and p = price of output. (a) For the firm find the
long run average cost curve , as well as the price of output and
the amount...

8. Suppose that there are 100 identical firms in a perfectly
competitive industry. Each firm has a short-run total cost curve of
the form C(q) = 1/300q3 +0.2q2 + 4q + 10
(d) A perfectly competitive market has 1,000 firms. In the very
short
run, each of the firms has a fixed supply of 100 units. The
market
demand is given by
Q = 160, 000 - 10,000P
(e) Calculate the equilibrium price in the very short run.
(f) Calculate...

Suppose that the perfectly competitive for market for milk is
made up of identical firms with long-run total cost functions given
by:
TC = 4 q3 - 24 q2 + 40 q
Where, q = litres of milk. Assume that these cost functions are
independent of the number of firms in the market and that firms may
enter or exist the market freely.
If the market demand is :
Qd = 8,000 - 160 P
1. What is the long-run...

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