Principles of Microeconomics (12th Edition)
12th Edition
ISBN: 9780134081199
Author: CASE
Publisher: PEARSON
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Chapter 9.A, Problem 5P
To determine
The
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The information below applies to a competitive firm that sells its output for $40 per unit.
• When the firm produces and sells 150 units of output, its average total cost is $24.50.
• When the firm produces and sells 151 units of output, its average total cost is $24.55.
Refer to Scenario 14-2 . Let Q represent the quantity of output. Which of the following magnitudes has the same value at Q = 150 and at Q = 151?
a. Total revenue
b. Average fixed cost
c. Total cost
d. Average revenue
Assume a competitive industry is initially at its long-run equilibrium, given the inverse market demand and supply functions:
P = 25000 − 0.2Qd and P = 5000 + 0.3Qs
If all current firms in this market have identical cost structures and produce 50 units at their break-even point:
Now, assume that the inverse demand for this product increases to P = 35000 − 0.2Qd, which leads to an entry of and additional number of firms whose cost structures are also identical to those who existed in the market before the increase in the demand. If the new long-run equilibrium price after both changes is 20000 cents:
a- How many new firms entered this market?
b- What is the value of the elasticity of supply at long-run market equilibrium?
c- Draw a fully-labeled graph that demonstrated the above changes at the firm and market levels, highlighting the long-run industry supply curve
A textile firm in a competitive industry employs a particularly efficient manager to run the operations at its production facility. In the textile industry, a plant manager typically makes a salary of $4,500 per month. The textile firm employing the superior manager faces the LAC and LMC curves shown in the figure below. In long-run competitive equilibrium, the price of the product is $9
a- A typical textile firm in this competitive industry has a minimum long-run average cost of $______. The typical textile firm earns economic profit of $______.
Chapter 9 Solutions
Principles of Microeconomics (12th Edition)
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