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11 b. Assume that the market price in the short run is P = $11, Giyen the way YOU drew With the current plant size, the minimum of short run average cost (SRAC) is $8, at the The average cost (SR and LR) of Q = 50,000 is $10. output level of Q = 62,000. a. Sketch the firm's LRAC, SRAC, SRMC, and LRMC curves. the diagram, identify the shot

11 b. Assume that the market price in the short run is P = $11, Giyen the way YOU drew With the current plant size, the minimum of short run average cost (SRAC) is $8, at the The average cost (SR and LR) of Q = 50,000 is $10. output level of Q = 62,000. a. Sketch the firm's LRAC, SRAC, SRMC, and LRMC curves. the diagram, identify the shot

Economics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter21: Costs And The Supply Of Goods
Section: Chapter Questions
Problem 8CQ
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b. Assume that the market price in the short run is P = $11. Given the way you drew the diagram, identify the short run equilibrium quantity (Qsı) in the graph. With the current plant size, the minimum of short run average cost (SRAC) is $8, at the The average cost (SR and LR) of Q = 50,000 is $10. 11 output level of Q = 62,000. a. Sketch the firm's LRAC, SRAC, SRMC, and LRMC curves. C. Next, assume that the price of $11 ersists long enough for the firm to make any profitable long run adjustment to plant size. Identify equilibrium quantity (Qs2). d. Finally, assume that the market attains long run eguilibrium. Given the way you drew the graph, identify this firm's equilibrium quantity (Q*) in the diagram. ot enogusd tedw o Tur pnol orlt nt Snn horle ert
Transcribed Image Text:b. Assume that the market price in the short run is P = $11. Given the way you drew the diagram, identify the short run equilibrium quantity (Qsı) in the graph. With the current plant size, the minimum of short run average cost (SRAC) is $8, at the The average cost (SR and LR) of Q = 50,000 is $10. 11 output level of Q = 62,000. a. Sketch the firm's LRAC, SRAC, SRMC, and LRMC curves. C. Next, assume that the price of $11 ersists long enough for the firm to make any profitable long run adjustment to plant size. Identify equilibrium quantity (Qs2). d. Finally, assume that the market attains long run eguilibrium. Given the way you drew the graph, identify this firm's equilibrium quantity (Q*) in the diagram. ot enogusd tedw o Tur pnol orlt nt Snn horle ert
TC: Pq LL > mc= 'AtC AQ iS: AC= TC/Q = 60>140 = 0.6 140-to 100 11. Envelope Curve I 200=0-7. Hazel's Hazelnuts sells in a perfectly competitive industry. The firm's minimum long run average cost (LRAC) occurs at output of Q = 100,000. The firm is currently operating with a smaller plant size-the size that achieves the minimum long run average cost of producing 50,000 units.
Transcribed Image Text:TC: Pq LL > mc= 'AtC AQ iS: AC= TC/Q = 60>140 = 0.6 140-to 100 11. Envelope Curve I 200=0-7. Hazel's Hazelnuts sells in a perfectly competitive industry. The firm's minimum long run average cost (LRAC) occurs at output of Q = 100,000. The firm is currently operating with a smaller plant size-the size that achieves the minimum long run average cost of producing 50,000 units.
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