Long run equilibrium, Microeconomics

1. Suppose that a monopolistically competitive firm must build a production facility in order to produce a product.  The fixed cost of this facility is FC = $24.  Also, the firm has constant marginal cost, MC = $3.  Demand for the product that the firm produces is given by P = 27-3Q. 

a) Fill in the table below.  If any of your values have decimals, you may round to only one numeral after the decimal (nearest 10th of a dollar). 

Quantity of Output

Price

Total Cost

Average Total Cost

1

 

 

 

2

 

 

 

3

 

 

 

4

 

 

 

5

 

 

 

6

 

 

 

7

 

 

 

8

 

 

 

9

 

 

 

b) How much output will this firm produce if it maximizes profit?

c) What price should this firm charge if it wants to maximize profit?

2. Carefully explain what will happen as we move from the short run to a long run equilibrium in a monopolistically competitive industry if firms are making a positive profit in the short run.  Your explanation should clearly state what will happen to the demand curve facing an individual firm and the reason why this happens.

Posted Date: 2/23/2013 1:38:37 AM | Location : United States







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

Write discussion on Long run equilibrium
Your posts are moderated
Related Questions
V alue Additivity In an efficient market the value of any 2 assets can be estimated as the sum of the values of the two individual assets. This is a variation on the theme

Determine the Profit-Maximizing Price If a firm targets a 25 % rate of return on sales, and has unit costs of production of $100, what price should it charge if it uses cost-p

Will Governments Follow Good Policies? That governments can assist in development and growth doesn't mean that governments will. The broad experience of growth in developing ec


Inflation-Unemployment Trade-off under Adaptive Expectations : By the late 1960s, the inverse relation between inflation and unemployment as suggested by the Phillips curve was

Explain about the specification of economics environments. Specification of Economic Environments: The primary step for studying an economic issue is to identify the econom

TC = Q3 – 8Q2 + 68Q + 4, get the median and mode

During a given interval a nation''s overall productivity grows at a compounded rate of 2%. Its population growth rate and degree of labor-force participation do not change over thi


Consumer Surplus  -Difference between maximum amounts a consumer is wishing to pay for a good and amount actually paid. The stepladder demand curve is converted into a