1. A firm in a perfectly competitive industry has fixed costs of FC = 15, marginalcosts of MC = 5+ 14q, and average variable costs of AVC = 5 + 7q. (d) Does the firm continue to supply this quantity in the short-run?(e) Suppose there exists a standard market demand function from consumers(downward slopping). Please provide a logical discussion about how the marketachieves short-run equilibrium.

Perfect competitive industry FC = 15 MC = 5+14q AVC = 5+7q

Answered: 1. A firm in a perfectly competitive…

1. A firm in a perfectly competitive industry has fixed costs of FC = 15, marginal costs of MC = 5+ 14q, and average variable costs of AVC = 5 + 7q.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter10: Prices, Output, And Strategy: Pure And Monopolistic Competition

Section: Chapter Questions

Problem 6E

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Question

1. A firm in a perfectly competitive industry has fixed costs of FC = 15, marginal
costs of MC = 5+ 14q, and average variable costs of AVC = 5 + 7q.

(d) Does the firm continue to supply this quantity in the short-run?
(e) Suppose there exists a standard market demand function from consumers
(downward slopping). Please provide a logical discussion about how the market
achieves short-run equilibrium.

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