Find the market price and output in the short run

Reference no: EM1369497

The market demand schedule for noodles is as follows:
Price
($ per case) Q Demanded
(case per week)
5.40 50,200
6.40 45,200
7.40 40,000
8.40 35,000
9.40 30,000
10.40 24,800
11.40 19,800
12.40 14,800

The market is perfectly competitive with constant input prices, and each firm has the same cost structure, described by the following table:

Output Marginal Cost AVC ATC
(cases per week) ($ per case) ($ per case) ($ PER CASE)

150 6.00 8.80 16.50
200 6.40 7.80 13.60
250 7.00 7.00 11.64
300 7.65 7.10 10.97
350 8.40 7.20 10.52
400 10.40 7.50 10.40
450 12.40 8.00 10.58
500 12.70 9.00 11.32

Initially, there are 100 firms in the industry. In answering the following questions, explain your answers.
a. What is the market price and output in the short run?
b. What is the economic profit of each firm in the short run?
c. What is the shutdown point for firms in the short run?
d. What is the long-run equilibrium price and the number of firms?

Reference no: EM1369497

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