Answered: Assuming that your firm is similar to…

Assuming that your firm is similar to the other firms in the industry, what do we expect to happen to the equilibrium price in this market in the long run?

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

Economics
You are the owner of a firm in a perfectly competitive market. The market supply
and demand are given by the equations:
D: P=8 - 0.1Q
S: P = 0.2 + 0.05Q
Your firm's marginal cost curve and total cost curve are:
- 0.1 + 0. 2q
20. 425 + 0. 1q +0. 1q²
MC
TC
Assuming that your firm is similar to the other firms in the industry, what do we
expect to happen to the equilibrium price in this market in the long run?
The price will stay as it is now.
The price will decrease as firms exit the industry and supply decreases.
OThe price will increase as other firms enter the industry and supply increases.
The price will increase as firms exit the industry and supply decreases.

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