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
Problem 1: The last half-century has witnessed major changes in the role that governments of developing countries have played, especially in terms of public spending. (a) Ex

An economy can produce a maximum of either 28 million tons of wheat or 7,000 automobiles, or various intermediate quantities, as depicted in the table below:

Sally recently finished her full time training and received certification as a nurses aid at the end of august.

What are the income and cross elasticities of demand?  Why might they be useful?  Explain.

How to calculate new profit earn by a firm in oligopoly if another firm cheat

Suppose that the following equation characterizes the demand for primary education in a developing country X: Q = 100 – 2P Where Q is quantity demanded in years of schooling and

cartels model of collusive oligopoly

Comparison with Our Needs: We can further test our performance by juxtaposing it with our requirements. Admittedly, it is very difficult to determine 'needed' rate of growth w

1. A standard solution of potassium hydroxide (KOH) was prepared by dissolving 15g of KOH in 250.0mL of distilled water. (a) Calculate the concentration of this standard solution.