C. Market for Electric Fans In the long-run equilibrium of a competitive market, the market supply and demand for electric fans are: Supply: Demand: P = 30 +0.50Q P = 100-1.5Q. where P is dollars per unit and Q is rate of production and sales in hundreds of units per day. A typical firm in this market has a marginal cost of production expressed as: MC = 3.0 + 15q.
C. Market for Electric Fans In the long-run equilibrium of a competitive market, the market supply and demand for electric fans are: Supply: Demand: P = 30 +0.50Q P = 100-1.5Q. where P is dollars per unit and Q is rate of production and sales in hundreds of units per day. A typical firm in this market has a marginal cost of production expressed as: MC = 3.0 + 15q.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: Firms In Competitive Markets
Section: Chapter Questions
Problem 8PA
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Transcribed Image Text:C. Market for Electric Fans
In the long-run equilibrium of a competitive market, the market supply and demand for electric fans
are:
Supply:
Demand:
P = 30 +0.50Q
P = 100 - 1.5Q.
where P is dollars per unit and Q is rate of production and sales in hundreds of units per day.
A typical firm in this market has a marginal cost of production expressed as:
MC = 3.0+ 15q.
Please use correct units.
a. Determine the market equilibrium price and rate of production in this market.
b. Determine the rate of production by the typical firm per month at the equilibrium price.
c. If all firms had the same cost structure, how many firms would compete to produce the
market output at the equilibrium price (computed above)?
d. Determine the producer surplus the typical firm has under the conditions described above.
(Note that the marginal cost function is linear and is the supply curve of the firm.)
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