Question
In: Economics
assume that a perfectly competitive ,constant cost industry is in a long run equilibrium with 20...
assume that a perfectly competitive ,constant cost industry is in a long run equilibrium with 20 firms .
each firm is producing 150 units of output which it sells at the price of R 20 per unit ,out of this amount each firm is paying R 4 tax per unit of the output .the government decide to abolish the tax
a)Explain what would happen in the short run to the equilibrium price and industry output,number of firms in the industry ,output and profit of each firm. illustrate on diagrams for the market and a particular firm.
b)Explain what would happen in the long to the equilibrium price and industry output ,number of firms in the industry ,output and profit of each firm .illustrate on diagram for the market and a particular .compare both to the initial long run equilibrium and to the short run equilibrium .
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
Assume that a perfectly competitive, constant cost industry is in a long run equilibrium with 60...
Assume that a perfectly competitive, constant cost industry is
in a long run equilibrium with 60 firms. Each firm is producing 90
units of output which it sells at the price of $41 per unit; out of
this amount each firm is paying $3 tax per unit of the output. The
government decides to decrease the tax, so the firms will be paying
$1 tax per unit.
a) Explain what would happen in the short run to the equilibrium
price...
Assume that a perfectly competitive, constant cost industry is in a long run equilibrium with 60...
Assume that a perfectly competitive, constant cost industry is
in a long run equilibrium with 60 firms. Each firm is producing 90
units of output which it sells at the price of $41 per unit; out of
this amount each firm is paying $3 tax per unit of the output. The
government decides to decrease the tax, so the firms will be paying
$1 tax per unit.
a) Explain what would happen in the short run to the equilibrium
price...
Assume that the gold-mining industry is perfectly competitive. a) Illustrate a long-run equilibrium using diagrams for...
Assume that the gold-mining industry is perfectly competitive.
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Specifically, would the...
Suppose that a perfectly competitive industry is in long-run equilibrium. Then the price of a complementary...
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If a perfectly competitive industry is in long-run equilibrium, then which of the following is true?...
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d)Economic profits for all firms are positive
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Suppose bicycles are produced by a competitive constant-cost
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following situation, design a supply-demand diagram that shows how
market price and quantity will be affected in both the short run
and the long run. In your diagrams, show the short-run supply,
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