# Micreoeconomics

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

1. 👍
2. 👎
3. 👁
1. 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

1. 👍
2. 👎

## Similar Questions

1. ### Economics

An industry currently has 100 firms, all of which have fixed costs of \$16 and avg. variable cost as follows: Q Avg. Variable Cost (\$) 1 1 2 2 3 3 4 4 5 5 6 6 a. Compute marginal cost and avg. total cost. b. the price is \$10. what

2. ### Economics

. Consider total cost and total revenue given in the table below: QUANTITY 0 1 2 3 4 5 6 7 Total cost \$8 \$9 \$10 \$11 \$13 \$19 \$27 \$37 Total revenue 0 8 16 24 32 40 48 56 a. Calculate profit for each quantity. How much should the

3. ### microeconomics

1. Market demand is given as QD = 250 – 0.5P. Market supply is given as QS = 2P. In a perfectly competitive equilibrium, what will be the value of consumer surplus? a.\$10 000 b.\$20 000 c.\$40 000 d.\$80 000 2. Market demand is

4. ### Economics

you are hired as the consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. Can the firm possibly be maximizing profit? If the firm is

1. ### Economics

The market for fertilizer is perfectly competitive. Firms in the market are producing output, but they are currently making economic losses. a. How does the price of fertilizer compare to the average total cost, the average

2. ### economics

A cloth producing firm in a perfectly competitive market has the following short-run total cost function: TC = 6000 + 400Q – 20Q2 + Q3. If the prevailing market price is birr 250 per unit of cloth, A. Should the firm produce at

3. ### MicroEcon

The market for apple pies in the city is competitive and has the following demand schedule: Price Quantity Demanded \$1 1,200 2 1,100 3 1,000 4 900 5 800 6 700 etc... 13 0 Each producer in the market has fixed costs of \$9 and the

4. ### micro economics

1) Assume that the gold-mining industry is competitive. a) Illustrate a long-run equilibrium using diagrams for the gold market and for the a representative gold mine. b) Suppose that an increase in jewellery demand induces a a

1. ### Economics

5. (Ch. 17 # 5) Sparkle is one firm of many in the market for toothpaste, which is in long-run equilibrium. a. Draw a diagram showing Sparkle’s demand curve, marginal revenue curve, average cost curve, and marginal cost curve.

2. ### 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

3. ### 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.

4. ### College - Microeconomics - help

Need some help on these questions. Thanks for your help. 9. The models used in economics: a)are usually limited to variables that are directly related. b)are essentially not reliable because they are not testable in the real