Consider the market for ice cream. Suppose that this market is perfectly competitive.The cost structure of the typical ice cream producer is as follows. Average total cost is equal to5011ATC(Q)+÷Q, average variable cost is equal to AVC(Q)Q, and marginal cost is equal to22MC(Q) = Q.40Suppose that demand for ice cream cones is given by PD =x QD.3300How many firms will operate in the market for ice cream in a long run equilibrium?

Firms in perfect competition earn zero economic profit in the long run. This means price is equal to…

Consider the market for ice cream. Suppose that this market is perfectly competitive. The cost structure of the typical ice cream producer is as follows. Average total cost is equal to 50 1 ATC(Q) +;Q, average variable cost is equal to AVC(Q) = ;Q, and marginal cost is equal to %3D 2 MC(Q) = Q. %3D 40 1 Suppose that demand for ice cream cones is given by P' 3 × Qº. %3D 300 How many firms will operate in the market for ice cream in a long run equilibrium?

Consider the market for ice cream. Suppose that this market is perfectly competitive. The cost structure of the typical ice cream producer is as follows. Average total cost is equal to 50 1 ATC(Q) +;Q, average variable cost is equal to AVC(Q) = ;Q, and marginal cost is equal to %3D 2 MC(Q) = Q. %3D 40 1 Suppose that demand for ice cream cones is given by P' 3 × Qº. %3D 300 How many firms will operate in the market for ice cream in a long run equilibrium?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter12: Firms In Perfectly Competitive Markets

Section: Chapter Questions

Problem 9P

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Consider the market for ice cream. Suppose that this market is perfectly competitive. The cost structure of the typical ice cream producer is as follows. Average total cost is equal to 50 1 1 ATC(Q) +;Q, average variable cost is equal to AVC(Q) =÷Q, and marginal cost is equal to 2 MC(Q) = Q. a.) Give a formula for the typical ice cream producer's average fixed cost AFC(Q). What is the typical ice cream producer's total fixed cost?
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