Long run eq, Microeconomics

The raspberry growing industry is a perfectly competitive industry. The firms in the industry have a U-shaped LAC, minimum average cost is $8 and the minimum efficient scale is 4 units of X. The market demand curve is given by Q = 48-P.
a. Determine the long-run equilibrium price, quantity per firm, market quantity and number of firms. What profit does each firm earn in long-run?
b. Suppose that the government imposes a per-unit tax of $2 on the firms in the industry. Analyze the long-run effects of the policy. Draw a two part diagram (one for the typical firm and one for the market) to show the long-run effect of the policy on the industry.
c. Instead of a per-unit tax above, suppose that the government is considering of imposing a lump-sum tax. What would the effect of the lump-sum tax be on the long-run equilibrium price? Will firms enter or exit the industry?
Posted Date: 4/8/2013 1:19:10 AM | Location : Canada







Related Discussions:- Long run eq, Assignment Help, Ask Question on Long run eq, Get Answer, Expert's Help, Long run eq Discussions

Write discussion on Long run eq
Your posts are moderated
Related Questions

The Value of Title Insurance While Buying a House *  A Scenario: - Price of house is $200,000 - 5% chance that seller does not own house *  Risk neutral buyer would pa

What is the arc cross elasticity of demand between Stop decay''s toothbrush and Decay fighter''s toothbrush? What does this indicate about the relationship between the two products

what is a perfect competition and how does it differ from monopoly?

Floating exchange rates There are two basic systems that can be used to determine the exchange rate between one country's currency and another's: a floating exchange rates (al

Q. Market Income and Socialism? Market Income: A household's total pre-tax income obtained from its activities in formal economy, including salaries andwages, investment income

When you drop by the only coffee shop in your neighbourhood, you notice that the price of a cup of coffee has enhanced  considerably since last week.  You decide it's not a big dea

Consider a hypothetical ABC economy in which the narrowly-defined measure of the  money supply (M1), as defined in the Canadian sense, in existence is 1250$ million. Assuming the e

if a country is managing its exchange rate what will do to counteract the effect of stock market bubble in this country? explain what central bank will do and show in supply and de

what are the uses of elasticity to the private sector