all firms in a competitive industry have the following long-run total cost curve: C(q) = q3...

all firms in a competitive industry have the following long-run total cost curve: C(q) = q³ -10q² +36q, where q is the output of the firm

a. Find the price in the market and how many units each firm will sell in the long run

b. If the market demand was Q = 10p-5, how much output will be bought and sold in the market?

c. How many firms will exist in the long run?

d. What is their economic profit?

e. Suppose the market demand shifted right due to a shock (the supply/costs did not change). If the new market demand is Q=20p-25, how many firms would be in the market after the long run adjustment?

Solutions

Expert Solution

Rahul Sunny answered 1 week ago

Next > < Previous

Related Solutions

All firms in a perfectly competitive industry have a long-run total cost function of T C(Q)...

All firms in a perfectly competitive industry have a long-run total cost function of T C(Q) = 36Q − 4Q2 + 2Q3. The market demand curve is QD = 640 − 10P. The price of inputs is not affected by the industry output. a) Find the (long-run) average cost and marginal cost curves. b) What quantity will each firm produce in the long run? c) What will be the market price in the long run? d) What will be the...

Consider the long run in a competitive industry in which all firms have the same marginal...

Consider the long run in a competitive industry in which all firms have the same marginal cost function: ??(?)=2?, where ? stands for the amount of output produced. Part 1: Suppose the market price for the good equals $15 per unit. If there are currently 38 firms in the industry, they will supply a total of __________ units of output. Part 2: Suppose the price was actually one dollar higher (so $16 instead of $15). The total amount of output produced...

14. Each firm belonging to a competitive industry has the following long-run cost function C(q) =...

14. Each firm belonging to a competitive industry has the following long-run cost function C(q) = 10q − 2q^2 + q^3 where q denotes the output of a representative firm. Firms can enter and exit the industry freely. The industry has constant costs: input prices do not change as industry output changes. The market demand facing the industry is given by Q = 20 − P (a) Derive the long-run industry supply curve. [5 marks] (b) How many firms operate...

In the long run in a competitive constant-cost industry A. A firm’s supply curve is upward...

In the long run in a competitive constant-cost industry A. A firm’s supply curve is upward sloping but the industry supply curve is perfectly elastic at the minimum of AVC. B. firm’s supply curve is upward sloping but the industry supply curve is perfectly elastic at the minimum of ATC. C. Both the industry and a firm’s supply curve are perfectly elastic at the minimum of ATC. D. The supply curve for a firm is perfectly elastic at the minimum...

A. A competitive firm has a short run total cost curve represented by the following equation:C(q)...

A. A competitive firm has a short run total cost curve represented by the following equation:C(q) = q2/4 + 50 a. (4) Derive how many units a profit maximizing competitive firm produce as a function of P(price)(qs(p)=). b. (2) If there are 100 firms in the market, derive the supply curve. c. (6) The market demand is 1200 –100P derive the market price and the firm’s profit. d.(2)Given your answer in c, explain what will start to happen in the...

Suppose all firms in a perfectly competitive and zero-fixed-cost industry previously in its long-run equilibrium are...

Suppose all firms in a perfectly competitive and zero-fixed-cost industry previously in its long-run equilibrium are now receiving an upfront subsidy from the US government. Please use a graphic tool to answer the following questions: a) How do the MC and AC curve change due to this government intervention? b) At the current price, are the existing firms earn positive, negative, or zero profit? Identify the size of the profit/loss in the graph. c) Will we observe entry or exit...

In the long run in a perfectly competitive industry, price equals marginal cost and firms earn...

In the long run in a perfectly competitive industry, price equals marginal cost and firms earn no economic profits. The following two equations describe this long-run situation for prices and costs, where the numbers indicate the amounts of each input (labor and land) needed to produce a unit of each product (wheat and cloth): P wheat = 60w + 40r P cloth = 75w + 25r If the price of wheat is initially 100 and the price of cloth is...

3. In the long run in a perfectly competitive industry, price equals marginal cost and firms...

3. In the long run in a perfectly competitive industry, price equals marginal cost and firms earn no economic profits. The following two equations describe this long-run situation for prices and costs, where the numbers indicate the amounts of each input (labor and land) needed to produce a unit of each product (wheat and cloth): P wheat = 60w + 40r P cloth = 75w + 25r If the price of wheat is initially 100 and the price of cloth...

A competitive constant-cost industry is made of identical firms producing q. The short run cost function...

A competitive constant-cost industry is made of identical firms producing q. The short run cost function of a representative firm is C(q)=1/2q2-10q +200. Market demand is given by: Qd=1500-50P. a) For what level of q is average cost minimized? b) What is the market equilibrium price that achieves the long-run equilibrium of zero-profit? How many units is each firm producing? c) How many units clear the market at that price? how many firms are there in the market? d) write...

Long Run Cost Derive a firm's total cost curve by using a firms isoquants and isocost...

Long Run Cost Derive a firm's total cost curve by using a firms isoquants and isocost lines(note:be sure to show what is on the axis,and the values for all points and curves-the correct labeling and spacing of the things is very mportant)for the case where the firm has a)constant return to scale b)decreasing return to scale c)increasing returns to scale d)For decreasing return to scale ,from the total cost curve,derive the correct long run marginal cost curve and long run...

Subjects