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November 20, 2014

November 20, 2014

Posted by **sleepy** on Wednesday, November 14, 2007 at 1:53am.

a. What is the industry's long-run supply schedule?

b. What is the long-run equilibrium price? The total industry output? The output of each firm? The profits of each firm?

c. The short-run total cost curve associated with each firm's long-run equilibrium output is given by

STC=.5q^2-10q+200

where SMC=q-10. Calculate the short-run average and marginal cost curves. At what necktie output level does short-run average cost reach a minimum?

d. Calculate the short-run supply curve for each firm and the industry short-run supply curve.

e. Suppose now painted neckties become more fashionable and the market demand function shifts upward to Q=2000-50P. Using this new demand curve, answer part b for the very short run when firms cannot change their outputs.

f. In the short run, use the industry short-run supply curve to recalculate the answers to part b.

g. What is the new long-run equilibrium for the industry?

- economics -
**economyst**, Wednesday, November 14, 2007 at 10:15amYesterday, a person under the user-name of "timmy" posted a very similiar question. Questions a and b were addressed in that post.

c) You are given the short run MC curve. AC is simply TC divided by Q.

So, SAC = .5Q - 10 + 200/Q

To find the minimum, take the first derivitive, then set the equation to zero. Hint: I get Q=20.

d) the short run supply curve for a firm is simply its MC curve. The industry supply curve is the sum of the firm supply curves, (ignoring any constants) I get supply is N*Q - 10, where N=number of firms (50 in this example)

Take it from here.

- economics -
**timmy**, Wednesday, November 14, 2007 at 12:20pmthank you economyst. I have been doing it correctly :) except for industry supply curve as 50q-500. Is that correct?

- economics -
- economics -
**economyst**, Wednesday, November 14, 2007 at 4:05pmThe industry supply curve could be written as Q = 500+50P

Alternative, using some algebra, industry supply curve is also: P = Q/50-10

(where Q = industry supply)

Check it out, solve for P when 500 + 50P = 1500-50P

(my bad, I used a big Q instead of a small q in my original post.

- economics -
**SB**, Saturday, October 11, 2008 at 12:00pmCould you please clarify how did you derive the answer for (a) supply schedule = 500+ 50P? Thanks,

SB

- zpixya nuwmb -
**zpixya nuwmb**, Friday, February 6, 2009 at 11:45amkxogbj eltjwyq tjxyorb mtfahqps bqtgvchm zlnbmohsy lrjswqbp

- economics -
**Anonymous**, Friday, December 21, 2012 at 10:50amdo cranberries help prevent uninary tract infections

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