13) The cobalt mining company is perfectly competitive. Each existing firm and every potential entrant faces an identical U- shaped average cost curve. The minimum level of average cost is $5 per ton and occurs when the firm produces y = 2 million tons of cobalt per year. The market demand curve for cobalt is Y = 205 - p, where Q is in millions of tons per year and the market price p is in dollars per ton. c) How many active cobalt producers will be in the market? Explain your answer. d) If the demand fell to Y = 185 - p, briefly explain what you would expect to happen to the following in the long run: i) price. ii) firm quantity. iii) firm profits. iv) the number of firms.

13) The cobalt mining company is perfectly competitive. Each existing firm and every potential entrant faces an identical U- shaped average cost curve. The minimum level of average cost is $5 per ton and occurs when the firm produces y = 2 million tons of cobalt per year. The market demand curve for cobalt is Y = 205 - p, where Q is in millions of tons per year and the market price p is in dollars per ton. c) How many active cobalt producers will be in the market? Explain your answer. d) If the demand fell to Y = 185 - p, briefly explain what you would expect to happen to the following in the long run: i) price. ii) firm quantity. iii) firm profits. iv) the number of firms.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.4P

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