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.
a) Illustrate a long-run equilibrium using diagrams for the gold
market and for a representative gold mine. b) Suppose that an
increase in jewelry demand induces a surge in the demand for gold.
Using your diagrams, show what happens in the short run to the gold
market and to each existing gold mine. c) If the demand for gold
remains high, what would happen to the price over time?
Specifically, would the...
Suppose that a perfectly competitive industry is in long-run equilibrium. Then the price of a complementary...
Suppose that a perfectly competitive industry is in long-run
equilibrium. Then the price of a complementary good decreases. Use
two graphs, one for the firm, and one for the industry (and words)
to explain what will happen in the short run, and then the long
run, to: a. The market demand curve? b. The market supply curve? c.
Market price? d. Market output? e. Representative firm output? f.
Representative firm profit?
If a perfectly competitive industry is in long-run equilibrium, then which of the following is true?...
If a perfectly competitive industry is in long-run equilibrium,
then which of the following is true?
a)Price equals minimum average cost.
b)Price equals minimum marginal cost
c)Accounting profits for all firms are zero
d)Economic profits for all firms are positive
Suppose bicycles are produced by a competitive constant-cost industry, which is initially in a long-run equilibrium....
Suppose bicycles are produced by a competitive constant-cost
industry, which is initially in a long-run equilibrium. For the
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,
long-run supply, and demand curves, along with any shifts in these
curves. Label the initial long-run equilibrium E0, the
new short-run equilibrium E1, and the new long-run
equilibrium E2.
Bicycling...
At long-run equilibrium in a perfectly competitive industry the typical firm is breaking even in an...
At long-run equilibrium in a perfectly competitive industry the
typical firm is breaking even in an opportunity cost sense. T/F
Perfectly competitive markets include firms that have
significant market power, with one typically being the price
leader. T/F
In perfectly competitive markets, the individual firm’s demand
curve is flat, while the market demand curve is typically sloping
downward to the right. T/F
When a firm maximizes profits, its price is derived from where
marginal revenue crosses marginal cost (extend the...
Consider a perfectly competitive industry at a long-run equilibrium. a. Suppose there is a sudden change...
Consider a perfectly competitive industry at a long-run
equilibrium. a. Suppose there is a sudden change in consumer
preferences which increases the demand for the firm’s product. What
are the effects of the change on the equilibrium of an individual
firm in the short and the long run? Draw the graphs. Explain. b.
Suppose there is an adverse technological shock that increases the
cost of production of the firms in the industry. What are the
effects of the change on...
Suppose that the restaurant market is a perfectly competitive industry in long run equilibrium. Each of...
Suppose that the restaurant market is a perfectly competitive
industry in long run equilibrium. Each of the identical restaurants
has the same (long run) cost function: T C = 225 + q 2 , where q is
the volume of sales by each establishment. Each of the identical
firms therefore have the same marginal cost: MC = 2q. (a) What is
the average cost function for the identical restaurants? (b) How
much does each individual firm produce in the long...
Assume that the oil industry is in a long-run competitive equilibrium at a price of $100...
Assume that the oil industry is in a long-run competitive
equilibrium at a price of $100 per barrel, and that the oil
industry is constant-cost. Use a carefully labeled set of two
graphs to explain what would happen in the long run to the number
of firms and to the production of each firm as a result of the drop
in price from $100 to $76, assuming it reflected a decrease in
demand. Be sure to define constant-cost and describe...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Explain the use of neural networking modeling in predictive analytics.
- Current Market Mix of Netflix, as detail as possible, please.
- This is all one question, thank you so much in advance! You must evaluate a proposal...
- X Company is considering the purchase of a new processor that costs $200,000. Shipping and setup...
- There are a large number of tasks involved in information technology and programming, and many of...
- Using one quantitative and one qualitative health policy research method described in this chapter, design a...
- What is the Rawls' solution to the age-old question of social (economic / distributive) justice?...
ADVERTISEMENT