# Micreoeconomics

posted by .

1. Assume a perfectly competitive constant cost industry, currently in long-run equilibrium. Market
demand in the industry is given by Q = 1500 - 25P. The short-run market supply curve is given by:
Q = 15P - 100 for P B 10
= 0 for P < 10
There are 25 firms in the industry.
(a) Calculate the equilibrium market price and quantity and the amount produced by each firm.
(b) Each firm is currently operating at the optimal plant size. What must be the minimum short-run average
variable costs for the firm and the efficient average cost? Explain

• Micreoeconomics -

First, I don't know what you mean by "for P B 10" or "=0 for P<10"

That said, equilibrium will occur when Qd=Qs. You have the equations, simply solve for Q and then P. Hint: I get Q=500, P=40. Since there are 25 firms, Qi=500/25 = 20

b) since each firm is at it's optimal plant size, and the P and Q are at their long-run equilibriums, the firm must be operating where AVC=P.

Take a shot, explain why this must be so.

I hope this helps

## Similar Questions

1. ### economics

suppose a competitive market consists of identical firms with a constant long run marginal cost of \$10. Suppose the demand curve is given by q=1000-p a)What are the price and quantity consumed in the long run competitive equilibrium?
2. ### economics

The hand made snuffbox industry is composed of 100 identical firms, each having short-run total costs given by STC=0.5q^2+10q+5 and short-run marginal costs by SMC=q+10 where q is the output of snuffboxes per day. a. What is the short-run …
3. ### economics

This is going to be really long, but I want to see if my answers are correct. This is problem number 10.10 in my Intermediate Microeconomics book. A perfectly competitive painted necktie industry has a large number of potential entrants. …
4. ### economics

A perfectly competitive painted necktie industry has a large number of potential entrants. Each firm has an identical cost structure such that long-run average cost is minimized at an output of 20 units. The minimum average cost is …
5. ### Mircoeconomics

A significant difference between monopoly and perfect competition is that: A. free entry and exit is possible in a monopolized industry but impossible in a competitive industry. B. competitive firms control market supply but monopolies …
6. ### microeconomics

The short-run cost curve for each firm's long run equilibrium output is C=y^2-20y+400. Calculate the short-run average and marginal cost curves. At what output level does short-run average cost reach a minimum?
7. ### Economics

The handmade snuffbox industry is composed of 100 identical firms, each having short – run total costs given by STC = 0.5q2 + 10q + 5 and short – run marginal costs by SMC = q + 10 where q is the output of snuffboxes per day. a) …
8. ### Economics

The handmade snuffbox industry is composed of 100 identical firms, each having short – run total costs given by STC = 0.5q2 + 10q + 5 and short – run marginal costs by SMC = q + 10 where q is the output of snuffboxes per day. a) …
9. ### Economics

A long-run supply curve is flatter than a short-run supply curve because A. firms can enter and exit a market more easily in the long run than in the short run. B. long-run supply curves are sometimes downward sloping. C. competitive …
10. ### Microeconomics

A perfectly competitive industry has a large number of potential entrants. Each firm has an identical cost structure such that long run average cost is minimized at an output of 10 units (qi=10 ). The minimum average cost is R5 per …

More Similar Questions