Consider a perfectly competitive industry where the typical firm has long run Total Cost TCLR = q2 + 2q + 196. a) Find the minimum efficient scale of the typical firm. MES = 30 b) Find the long run equilibrium price. P = 30 Suppose demand in this industry is Qd = 1,700 – 10P. c) Find the long run equilibrium quantity and how many firms can survive in this industry in the long run. Equilibrium Quantity = 1400 and # of firms = 100 Suppose government introduces a $10 per unit tax collected from sellers. d) The tax alters the long run total cost of the typical firm. In which way? e) Does the tax affect the minimum efficient scale of the typical firm? f) In the long run, by how much will the equilibrium price increase in response to the tax?

Consider a perfectly competitive industry where the typical firm has long run Total Cost TCLR = q2 + 2q + 196. a) Find the minimum efficient scale of the typical firm. MES = 30 b) Find the long run equilibrium price. P = 30 Suppose demand in this industry is Qd = 1,700 – 10P. c) Find the long run equilibrium quantity and how many firms can survive in this industry in the long run. Equilibrium Quantity = 1400 and # of firms = 100 Suppose government introduces a $10 per unit tax collected from sellers. d) The tax alters the long run total cost of the typical firm. In which way? e) Does the tax affect the minimum efficient scale of the typical firm? f) In the long run, by how much will the equilibrium price increase in response to the tax?

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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Consider a perfectly competitive industry where the typical firm has long run Total Cost TCLR = q2 + 2q + 196.a) Find the minimum efficient scale of the typical firm.b) Find the long run equilibrium price.Suppose demand in this industry is Qd = 1,700 – 10P.c) Find the long run equilibrium quantity and how many firms can survive in this industry in the long run.Suppose government introduces a $10 per unit tax collected from sellers.d) The tax alters the long run total cost of the typical firm. In which way?e) Does the tax affect the minimum efficient scale of the typical firm?f) In the long run, by how much will the equilibrium price increase in response to the tax?g) Once the market has reached its long run equilibrium, how much revenue does the tax collect in each period of time? How muchConsumer Surplus is lost due to the tax?
Consider a perfectly competitive industry where the typical firm has long run Total Cost TCLR = q2 + 2q + 196. a) Find the minimum efficient scale of the typical firm. Find the long run equilibrium price. Suppose demand in this industry is Qd = 1,700 – 10P. b) Find the long run equilibrium quantity and how many firms can survive in this industry in the long run. Suppose government introduces a $10 per unit tax collected from sellers. c) The tax alters the long run total cost of the typical firm. In which way? Does the tax affect the minimum efficient scale of the typical firm? In the long run, by how much will the equilibrium price increase in response to the tax? Once the market has reached its long run equilibrium, how much revenue does the tax collect in each period of time? How much Consumer Surplus is lost due to the tax?
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