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If it is not in long-run equilibrium, what will happen in this industry to restore long-run equilibrium? 11 In long-run equilibrium, what is the firm's profit-maximizing quantity?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

10 If it is not in long-run equilibrium, what will happen in this industry to restore long-run equilibrium?

11 In long-run equilibrium, what is the firm's profit-maximizing quantity?

Figure 12-18
Revenue
MC
and cost
(dollars
per unit)
d
$40
MR
ATC
AVC
24
C
20
14
12
8
a
55
100 150
200
Quantity
.......

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A9 The characteristics of a "perfectly competitive" market require that there is 1) a large number of firms, 2) producing products that are identical across firms, 3) in an industry where there are no barriers to entry. It's unlikely that any industry accurately reflects these extreme assumptions, but what industries can you think of that do display these characteristics at least to some extent? Try to identify the limits of your example in reflecting "perfect" competition.
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