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
Ask qdescribe average and marginal revenue under imperfect competitionuestion

What should be the decent/appropriate growth rate in any country?  Answer:   A growth rate of among 2-3% is considered normal for mature developed countries; for LICs, 5-7% is



Estimating Occupational Structure of the Labour Force within Economic Sectors in the Target Year The total output in the economy, the sectoral shares therein and labour produc

What currency was used in the 1700s? Ans) this is depends on the country. Most currencies, though, were based on gold and silver. In America, in the 13 colonies, tobacco wa

1).Explain a coordination failure. Using the Prisoner's Dilemma example above, discuss coordination failure. 2). What's a Market Failure? Please define the circumstances under w

Public-Private Partnerships (PPPs):A form of financing public investment and sometimes the direct provision of public services, in that finance is provided by private investors (in

consumers oriented application

using necessary and sufficient condition explain consumer surplus diagrammically and mathematically?