Suppose a perfectly competitive increasing-cost industry is in long-run equilibrium.Now assume that a decrease in consumer demand occurs. After all resultingadjustments have been completed, the new equilibrium price:Owill be less than the initial price, but the new industry output will be greater thanthe original output.and industry output will be less than the initial price and output.and industry output will be greater than the initial price and output.will be greater than the initial price, but the new industry output will be less thanthe original output.

Let it is purely competitive, rising-cost industry is in long-term equilibrium. Now consider that a…

tments have been completed, the new equilibrium price: rill be less than the initial price, but the new industry output will be gre he original output. nd industry output will be less than the initial price and output. and industry output will be greater than the initial price and output. will be greater than the initial price, but the new industry output will be

tments have been completed, the new equilibrium price: rill be less than the initial price, but the new industry output will be gre he original output. nd industry output will be less than the initial price and output. and industry output will be greater than the initial price and output. will be greater than the initial price, but the new industry output will be

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter10: Prices, Output, And Strategy: Pure And Monopolistic Competition

Section: Chapter Questions

Problem 6E

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Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2 Marginal cost: MC = q where q is an individual firms quantity produced. The market demand curve for this product is Demand:QD = 120 P where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market. a. What is each firms fixed cost? What is its variable cost? Give the equation for average total cost. b. Graph average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is average-total-cost curve at its minimum? What is marginal cost and average total cost at that quantity? c Give the equation for each firms supply curve. d. Give the equation for the market supply curve for the short run in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market in the short run? f. In this equilibrium, how much does each firm produce? Calculate each firms profit or loss. Is there incentive for firms to enter or exit? g. In the long run with free entry and exit, what is the equilibrium price and quantity in this market? h. In this long-run equilibrium, how much does each firm produce? How many firms are in the market?
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A market is in long-run equilibrium and firms in this market have identical cost structures suppose demand in this market decreases. Which of the folowing are coreet descriptors of what happens to tho individual firms and the whole market as the market fist leaves and then returns to long-run equilibrium? Instructions: You may select more than one answer cick the box with a check mark for correct answers and dick to empty the box for the wrong answers. 0 Market proe will decrease in the longrun. O Market quantity will remain the same in the long-run. O Individual firms' profit maximizing output will decrease in the long run. O Firms will exit the market inthe long run. O Individual firms' profit maximizing output wil decrease in the shon-nun. O Market quantity decrease in the long run. o Firms win enter into the market in the long run. O Market price wil decrease in the short-run. References eBook & Resources Leaming objective: 13-08 Calculato the Section Responding…
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