The long run industry supply curve.

Question

Want to see the full answer?

Answer 1

Question

Chapter P3, Problem 3KC

To determine

The long run industry supply curve.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

A firm produces a product in a perfectly competitive industry and has a total cost function TC= 50+4q+2q². a. At the short-run market price of $20, the firm is producing 5 units of output. Is the firm maximizing its profit? Explain. b. What quantity of output will the firm produce in the long run, assuming there is no change in cost structure? What will be the long-run equilibrium price? c. Graphically depict the long-run equilibrium for an individual firm within this market.

Assume the industry for flour tortillas in Denver is perfectly competitive. There are 200 firms. Seventy-five of the firms are “high-cost,” with short-run supply curves QHC = 5P. The other 125 are “low-cost,” with short-run supply curves QLC = 8P. Quantities are measured in dozens of tortillas and prices in dollars. Derive the short-run industry supply curve for tortillas QS. Assume the market demand curve for tortillas is given by QD = 10,000 − 625P. Find the market equilibrium price and quantity. At this price, how many dozens of tortillas are produced by the high- and low-cost firms, respectively? Determine total industry producer surplus at the equilibrium. Especially need the producer surplus.

Suppose Robin's Clock Works produces in a perfectly competitive market. Suppose the average total cost of clocks is $95, the average variable cost of clocks is $90, and the price of clocks is $85. If the firm is producing the level of output where marginal cost equals price, then in the short run the firm: A) can increase profit by increasing output.B) is earning a positive economic profit.C) should continue to produce since total revenue exceeds total variable cost.D) should shut down.