Use the figure below, which shows the situation facing Mike’s Bikes, to answer the questions below. The demand and costs of other mountain bike producers are similar to those of Mike’s Bikes.What quantity does the firm produce and what is its price? Calculate the firm’s economic profit or economic loss.What will happen to the number of firms producing mountain bikes in the long run?How will the price of a mountain bike and the number of bikes produced by Mike’s Bikes change in the long run? How will the quantity of mountain bikes produced by all firms change in the long run?Is there any way for Mike’s Bikes to avoid having excess capacity in the long run?Is the market for mountain bikes efficient or inefficient in the long run? Explain your answer. FIGURE 14.2Problems 14 to 18400MCATC350300.....250200D* 150100MR50200100Quantity (mountain bikes per week)Price and cost (dollars per bike)

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Answered: Use the figure below, which shows the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Use the figure below, which shows the situation facing Mike’s Bikes, to answer the questions below. The demand and costs of other mountain bike producers are similar to those of Mike’s Bikes.

What quantity does the firm produce and what is its price? Calculate the firm’s economic profit or economic loss.
What will happen to the number of firms producing mountain bikes in the long run?
How will the price of a mountain bike and the number of bikes produced by Mike’s Bikes change in the long run? How will the quantity of mountain bikes produced by all firms change in the long run?
Is there any way for Mike’s Bikes to avoid having excess capacity in the long run?
Is the market for mountain bikes efficient or inefficient in the long run? Explain your answer.

FIGURE 14.2
Problems 14 to 18
400
MC
ATC
350
300
.....
250
200
D
* 150
100
MR
50
200
100
Quantity (mountain bikes per week)
Price and cost (dollars per bike)

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