Chapter 7, Problem 11SQP

Suppose the market for corn is a purely competitive, constant-cost industry that is in long-run equilibrium. Now assume that an increase in consumer demand occurs. After all resulting adjustments have been completed, the new equilibrium price will be Multiple Choice   the same as the initial equilibrium price, but the new industry output will be greater than the original output.   greater than the initial price, and the new industry output will be greater than the original output.   less than the initial price, but the new industry output will be greater than the original output.   the same as the initial equilibrium price, and the industry output will remain unchanged.

The long-run cost function of the representative firm in an industry is C(q)=q3/3-6q2 +30q and the market demand function is D(p)=3600-120p. Determine the quantity supplied by the representative firm, the market price, the total sales, and the number of firms in the long-run industry equilibrium.

Discuss to what extent you agree with the following statements. Firms facing loss in short run may continue to produce in a competitive market structure.

Given the cost information in the previous question and an industry demand function of Q = 2400 - 5p, how many firms are in this industry in the long-run equilibrium?

Ajax Cleaning Products is a medium-sized firm operating in an industry dominated by one large firm—Tile King. Ajax produces a multiheaded tunnel wall scrubber that is similar to a model produced by Tile King. Ajax decides to charge the same price as Tile King to avoid the possibility of a price war. The price charged by Tile King is $20,000. Ajax has the following short-run cost curve:TC = 800000 - 5000Q + 100Q2a. Compute the marginal cost curve for Ajax.b. Given Ajax’s pricing strategy, what is the marginal revenue function for Ajax?c. Compute the profit-maximizing level of output for Ajax.d. Compute Ajax’s total dollar profits.

In a constant-cost industry, price always equals a)LRMC and minimum LRAC b)LRMC and LRAC, but not necessarily minimum LRAC c)minimum LRAC, but not LRMC d)LRAC and minimum LRMC e)minimum LRAC and minimum LRMC

For a constant cost industry in a purely competitive market structure, whenever there is an increase in market demand and price, then the supply curve   Group of answer choices   Shifts to the right with new firms’ entry and stops at the point where the new long-run equilibrium intersects at the same market price as before.   Shifts to the left as some firms leave the market and the market price rises to a new level.   Shifts to the right with new firms’ entry and stops at the point where the new long-run equilibrium intersects at a lower market price.   The supply curve becomes unstable. and firms leave the market because management costs become very high

The market determined price in a perfectly competitive industry is P = Rs. 10. Suppose that the total cost equation of an individual firm in the industry is given by the expression TC 1000+2Q+0.01Q2 Why does a competitive firm is considered as a price taker and Monopoly firm as a price

T-Shirt Enterprises is selling in a purely competitive market. It is producing 3,000 units, selling them for $2.00 each. At this level of output, the average total cost is 2.50 and the average variable cost is $2.20. Based on these data, the firm should Multiple Choice   shut down in the short run.   decrease output to 2,500 units.   continue to produce 3,000 units.   increase output to 3,500 units.