Price Quantity Demanded $1 1,200 pies 2 1,100 3 1,000 4 900 800 6 700 7 600 8 500 9 400 10 300 11 200 12 100 13 Each producer in the market has fixed costs of $9 and the following marginal cost: Quantity Marginal Cost 1 pie $2 2 4 3 6 5 10 12 %24

Price Quantity Demanded $1 1,200 pies 2 1,100 3 1,000 4 900 800 6 700 7 600 8 500 9 400 10 300 11 200 12 100 13 Each producer in the market has fixed costs of $9 and the following marginal cost: Quantity Marginal Cost 1 pie $2 2 4 3 6 5 10 12 %24

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter2: The One Lesson Of Business

Section: Chapter Questions

Problem 2.1IP

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Question

TI,c market for apple pies in the city of F.ctenia is competitive and has the following demand schedule;

a. Compute each producer's total cost and average
total cost for l to 6 pies.
b. The price of a pie is now SIL How many pies are
sold? How many pies docs each producer make?
How many producers are there? How much profit
docs each producer earn?

c. ls the situation d escribed in part (bl a long-run
equilibrium? Why or why not?
d. Suppose tha t in the Jong run there is free entry
and exit. How much profit does each producer
earn in the Jong-run equilibrium? Wha t is the
market price? How many pies docs each producer
make? How many p ies are sold in the market?
How many pie producers arc operating?

Price Quantity Demanded
$1
1,200 pies
2
1,100
3
1,000
4
900
800
6
700
7
600
8
500
9
400
10
300
11
200
12
100
13
Each producer in the market has fixed costs of $9 and
the following marginal cost:
Quantity Marginal Cost
1 pie
$2
2
4
3
6
5
10
12
%24

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