Economics (Irwin Economics)
21st Edition
ISBN: 9781259723223
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 2P
To determine
Average Total Cost .
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose that each firm in a competitive industry has the following as the Total cost: TC=50+ ½q2
Where q is an individual firm’s quantity produced.
The market demand curve for this product is
Demand: Q = 120 – P
Where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market
What is each firm’s fixed cost? What is its variable cost?
At what quantity efficiency of scale would be achieved?
Give the equation for each firm’s supply curve
Give the equation for the market supply curve for the short run
What is the equilibrium price and quantity for this market in the short run?
In this equilibrium, how much does each firm produce? Is there incentive for firms to enter or exit?
In the long run with free entry and exit, what is the equilibrium price and quantity in this market?
In the long-run equilibrium, how many firms are in the market?
I want the subparts 4,5,6 to be solved. Thank you
Suppose that each firm in a competitive industry has the following as the Total cost: TC=50+ ½q2
Where q is an individual firm’s quantity produced.
The market demand curve for this product is
Demand: Q = 120 – P
Where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market
What is each firm’s fixed cost? What is its variable cost?
At what quantity efficiency of scale would be achieved?
Give the equation for each firm’s supply curve
Give the equation for the market supply curve for the short run
What is the equilibrium price and quantity for this market in the short run?
In this equilibrium, how much does each firm produce? Is there incentive for firms to enter or exit?
In the long run with free entry and exit, what is the equilibrium price and quantity in this market?
In the long-run equilibrium, how many firms are in the market?
PLEASE ANSWER WITH GRAPH: Suppose that an industry is initially at a long-run competitive equilibrium. Originally,
firms in the industry had very low fixed costs, but due to a new law, firms' fixed costs increased significantly. Throughout
all these changes, the industry remains competitive. Graphically show how this new law changes the industry in both the
short run and long run. To receive full credit, you must: Correctly show how the law changed the MC, AVC, ATC, LRS,
Demand and Short - Run Supply Curves (if at all). Correctly show profits at the firm level immediately after the new law
is put in place and in the long run. Correctly show how the market will adjust to the new long-run competitive
equilibrium. Clearly show how the long-run equilibrium market quantity and market price
Chapter 11 Solutions
Economics (Irwin Economics)
Knowledge Booster
Similar questions
- The coffee industry is comprised of many firms producing an identical product. Market demand and supply conditions are indicated in the left-hand panel of the figure below; the long-run cost curves of a representative coffee farmer are shown in the right-hand Currently, the market price for coffee is $2 per pound, and at that price consumers are purchasing 800,000 pounds of coffee per day. Using the graphs shown in the images find:a. How many pounds of coffee will each farmer produce if they want to maximize profits?b. How many farmers are currently serving the industry (fractional numbers are fine)?c. In the long run, what will the equilibrium price of coffee be? Briefly explain your answer.arrow_forwardA firm in a purely competitive industry is currently producing 1,200 units per day at a total cost of $500. If the firm produced 1,000 units per day, its total cost would be $350, and if it produced 700 units per day, its total cost would be $325. Instructions: Enter your answers rounded to two decimal places. a. What is the firm's ATC per unit at these three levels of production? At 1,200 units per day, ATC = $ At 1,000 units per day, ATC = $ At 700 units per day, ATC = $ b. If every firm in this industry has the same cost structure, is the industry in long-run competitive equilibrium? (Click to select) V c. From what you know about these firms' cost structures, what is the highest possible price per unit that could exist as the market price in long-run equilibrium? 2$ d. If that price ends up being the market price and if the normal rate of profit is 10 percent, then what will each firm's accounting profit per unit be? cents per unitarrow_forwardA firm in a purely competitive industry is currently producing 1,400 units per day at a total cost of $500. If the firm produced 1,200 units per day, its total cost would be $350, and if it produced 900 units per day, its total cost would be $325. Instructions: Enter your answers rounded to two decimal places. a. What is the firm's ATC per unit at these three levels of production? At 1,400 units per day, ATC = $ At 1,200 units per day, ATC = $ At 900 units per day, ATC = $ b. If every firm in this industry has the same cost structure, is the industry in long-run competitive equilibrium? |(Click to select) ♥ c. From what you know price in long-run equilibrium? pout these ns' cost structures, what the highest possible price per unit could exist as the market 2$ d. If that price ends up being the market price and if the normal rate of profit is 10 percent, then what will each firm's accounting profit per unit be? cents per unitarrow_forward
- If there were 60 firms in this market, the short-run equilibrium price of titanium would be $________ per kilogram. At that price, firms in this industry would (earn a positive profit, shut down, earn zero profit, operate at a loss). Therefore, in the long run, firms would ( enter, exit, neither enter nor exit) the titanium market. Because you know that perfectly competitive firms earn (positive, zero, negative) economic profit in the long run, you know the long-run equilibrium price must be $_______ per kilogram. From the graph, you can see that this means there will be (20, 40, 60) firms operating in the titanium industry in long-run equilibrium.arrow_forwardSuppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + 0.5Q^2The market demand curve for this product is: Qd= 120 −PThere are 9 firms in the market.a) What are each firm’s: fixed cost, variable cost, marginal cost, and average total cost? Graph the average-total-cost curve and the marginal-cost curve.b) Give the equation for each firm’s supply curve.the average-total-cost curve at its minimum? What is marginal cost and average totalc) Give the equation for the market supply curve for the short run in which the numbercost at that quantity?arrow_forwardWhat is the firm’s corresponding average total cost (ATC) per unit produced?arrow_forward
- Suppose that the perfectly competitive firm with the costs and revenues shown in the figure to the right is contemplating whether or not to produce 12 units of output. If the firm were to produce the 12th unit and, in doing so, increase its hourly total costs to $68 from $56, what would be its marginal cost? Would producing 12 units maximize the firm's profits? What would be the firm's total revenues per hour? What would be its hourly economic profits? If it were to produce the 12th unit, the firm's marginal cost would be MC = $ nothing per unit. Since the market price is P = $ nothing per unit and this price ▼ is larger than equals is less than the firm's marginal revenue, marginal cost ▼ is less than is larger than equals marginal revenue, and producing the 12th unit ▼ would would not satisfy the profit-maximizing rule. The firm's total revenue would equal $ nothing per hour and economic profits would equal $ nothing per hour. (Enter your responses as whole…arrow_forwardConsider the perfectly competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. 100 90 80 70 60 50 40 АТС 30 20 AVC 10 MC O 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of pounds) COSTS (Dollars per pound)arrow_forwardSuppose there are 7 firms in this industry, each of which has the cost curves previously shown.arrow_forward
- For second graph; suppose there are 10 firms in this industry, each of which has the cost curves previously shown.arrow_forwardWhen output is 3 units, which of the following is correct? * The table below shows a competitive firm's total variable cost (TVC) and total fixed cost (TFC) at various units of output. S Output TVC TFC 9 1 9 8. 9 3 15 9 4 26 9 5 38 9 O AVC is 5 & MC is 6 O AVC is 5 & MC is 7 O AVC is 6 & MC is 5 O AVC is 7 & MC is 7 O AVC is 7 & MC is 6arrow_forwardConsider the perfectly competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MCMC), average total cost (ATCATC), and average variable cost (AVCAVC) curves shown on the following graph. The following diagram shows the market demand for steel. Use the orange points (square symbol) to plot the short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 15 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 20 firms. If there were 20 firms in this market, the short-run equilibrium price of steel would be per ton. At that price, firms in this…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education