The market for apple pies in the city of Ectenia is competitive and has the followingdemand schedule:Price Quantity Demanded$ 1 1,200 pies2 1,1003 1,0004 9005 8006 7007 6008 5009 40010 30011 20012 10013 0 ch producer in the market has fixed costs of $9 and the following marginal cost:Quantity Marginal Cost1 pie $ 22 43 64 85 106 12a. Compute each producer’s total cost and average total cost for 1 to 6 pies.b. The price of a pie is now $11. How many pies are sold? How many pies does eachproducer make? How many producers are there? How much profit does eachproducer earn?c. Is the situation described in part (b) a long-run equilibrium? Why or why not?d. Suppose that in the long run there is free entry and exit. How much profit does eachproducer earn in the long-run equilibrium? What is the market price? How many piesdoes each producer make? How many pies are sold in the market? How many pieproducers are operating?
The market for apple pies in the city of Ectenia is competitive and has the following
demand schedule:
Price Quantity Demanded
$ 1 1,200 pies
2 1,100
3 1,000
4 900
5 800
6 700
7 600
8 500
9 400
10 300
11 200
12 100
13 0
ch producer in the market has fixed costs of $9 and the following marginal cost:
Quantity Marginal Cost
1 pie $ 2
2 4
3 6
4 8
5 10
6 12
a. Compute each producer’s total cost and
b. The price of a pie is now $11. How many pies are sold? How many pies does each
producer make? How many producers are there? How much profit does each
producer earn?
c. Is the situation described in part (b) a long-run equilibrium? Why or why not?
d. Suppose that in the long run there is free entry and exit. How much profit does each
producer earn in the long-run equilibrium? What is the market price? How many pies
does each producer make? How many pies are sold in the market? How many pie
producers are operating?
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