Suppose a competitive market consists of identical firms

Assignment Help Business Economics
Reference no: EM13734286

Suppose a competitive market consists of identical firms with a constant longrun marginal cost of $10. (There are no fixed costs in the long run.) Suppose the demand curve at any price, P, is given by Q = 1000 ? P.

a) What are the price and quantity consumed in the long-run competitive equilibrium?

b) Suppose one new firm enters that is different from the existing firms. The new firm has a constant marginal cost of $9 and no fixed costs but can only produce 10 units (or fewer). What are the price and the quantity consumed in the long-run competitive equilibrium? Are these the same as in (a)? Explain

c) Are positive economic profits inconsistent with a long-run competitive equilibrium?

d) Identify the marginal cost of the last unit sold in (b). Is it $10 or $9? That is, if demand fell by 1 unit, would the new entrant or the other firms reduce output?

e) How much profit do the less efficient firms in (b) earn?

f) In the long-run competitive equilibrium, must the profit of the marginal entrant (the next firm to enter the market if demand expands or, alternatively, the next firm to leave the market if demand contacts) be zero?

Reference no: EM13734286

Questions Cloud

Average cost of production : The average cost of production _______ if there are scale economies, and ________ if there are scale diseconomies.
Does the most ferocious lion eat the christian : Ten lions confront a single Christian. The most ferocious lion can eat the Christian if he wants to. If the most ferocious lion does not eat the Christian, everyone goes home.
What is the equation for E-Mobiles Marginal Revenue curve : Suppose E-Mobile purchases every gas company in the world and set their prices. Then it would have a control of the gas market with no other competition. Thus E-Mobile becomes a monopolist in providing gas. The market demand curve faced by E-Mobile i..
Behavior of both a monopoly and a dominant firm : By showing the behavior of both a monopoly and a dominant firm in the same graph, show that monopoly profits are greater than the profit of a dominant firm in the no-entry equilibrium. Show how much consumers benefit from buying from a dominant firm-..
Suppose a competitive market consists of identical firms : Suppose a competitive market consists of identical firms with a constant longrun marginal cost of $10. (There are no fixed costs in the long run.) Suppose the demand curve at any price, P, is given by Q = 1000 ? P.
Geographic market for the production of natural gas : Is it appropriate to think of all of Australia as a single geographic market for the production of natural gas? If so, explain why. If not, what are the relevant geographic markets? Based on your geographic market definition(s) above, would you expec..
Compressor is a key component in manufacturing : The compressor is a key component in manufacturing both refrigerators and air-conditioners.
What direction is the slope of the production function : According to the traditional view, in what direction is the slope of the production function, with capital per worker on the horizontal axis and output per worker on the vertical axis?
Imply concerning productivity or standard of living : Suppose that real GDP grew more in Country A than in Country B last year. Which of the following does this imply concerning productivity or standard of living?

Reviews

Write a Review

Business Economics Questions & Answers

  Economics assignment

This document contains various important questions and their appropriate answers in the subject field of Economics.

  Demand and supply curves

Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.

  Long-run perfectly competitive equilibrium for the firm

Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..

  Supply and demand diagrams

Explain each of the following using supply and demand diagrams,  With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.

  Case study: fisher-price toys

The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.

  Draw the production possibility curve

Draw the production possibility curve and a. Define consumer surplus and producer surplus.

  Tax revenue

The Australian government administers two programs that affect the market for cigarettes

  Maximize total welfare

How many tickets to sell to maximize total welfare.

  Difference between the cv and the ev

The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled

  Depict von neumann-morgenstern utility index u in a diagram

Depict the von Neumann-Morgenstern utility index u in a diagram

  What is the market solution

What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution

  Calculate gross national product and net national product

Calculate gross national product and net national product

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd