Suppose that each firm in a competitive industry has the following as the Total cost: TC=50+ ½q2Where q is an individual firm’s quantity produced. The market demand curve for this product isDemand: Q = 120 – PWhere P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market What is each firm’s fixed cost? What is its variable cost?At what quantity efficiency of scale would be achieved?Give the equation for each firm’s supply curveGive the equation for the market supply curve for the short runWhat is the equilibrium price and quantity for this market in the short run?In this equilibrium, how much does each firm produce? Is there incentive for firms to enter or exit?In the long run with free entry and exit, what is the equilibrium price and quantity in this market?In the long-run equilibrium, how many firms are in the market?

The efficiency of scale is the point where the average cost is the minimum and it is equal to…

Answered: Suppose that each firm in a competitive…

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 11PA: Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2...

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Suppose that each firm in a competitive industry has the following as the Total cost: TC=50+ ½q²

Where q is an individual firm’s quantity produced.

The market demand curve for this product is

Demand: Q = 120 – P

Where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market

What is each firm’s fixed cost? What is its variable cost?
At what quantity efficiency of scale would be achieved?
Give the equation for each firm’s supply curve
Give the equation for the market supply curve for the short run
What is the equilibrium price and quantity for this market in the short run?
In this equilibrium, how much does each firm produce? Is there incentive for firms to enter or exit?
In the long run with free entry and exit, what is the equilibrium price and quantity in this market?
In the long-run equilibrium, how many firms are in the market?

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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