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
CROP PATTERNS: Analysis of crop patterns in India should relate to the following aspects:  a) The relative significance of different crops/crop groups in the overall area u

Jane receives utility from days spent travelling on vacation domestically(D) and days


Substitution Effect -  The  substitution effect is change in an item's consumption associated with the change in the price of the item, level of utility held constant. -  Wh

1. Suppose the banking system has reserve of $750000, demand deposits of $2500000 and a reserve requirement of 20%. a. if the fed now purchases $125,000 worth of govt bonds from t

a severe restriction occurs to the availability of consumer credit throughout the banking and finance system

Suppose Dlamini has R5 000 to spend on trousers and shirts. The price of trousers is R500 each and that of shirts is R312.50 each. 6.1 Use the information and calculate consumer eq

Q. Define Economies of Scale? Economies of Scale: Most economic production requires producing firm or organization to make an initial investment (in real capital, in design and

Duality Theorems: The relationship between the direct and indirect utility functions may be described by a set of duality theorems. The following illustrative theorems are pro

implication tructures of various market structures for price determination