Illustrate on diagrams for the market and particular firm

Assignment Help Business Economics

Reference no: EM131000141

Assume that a perfectly competitive, constant cost industry is in a long run equilibrium with 20 firms. Each firm is producing 70 units of output which it sells at the price of $18 per unit; out of this amount each firm is paying $2 tax per unit of the output. The government decides to abolish the tax.

a) Explain what would happen in the short run to the equilibrium price and industry output; number of firms in the industry; output and profit of each firm. Illustrate on diagrams for the market and a particular firm.

b) Explain what would happen in the long run to the equilibrium price and industry output; number of firms in the industry; output and profit of each firm. Illustrate on diagrams for the market and a particular firm. Compare both to the initial long run equilibrium and to the short run equilibrium.

Your answer to this question should include graphs and explanations in words. Please note that the numbers are provided for convenience; you can indicate them on graphs, but you are not expected to do any calculations

Reference no: EM131000141

Questions Cloud

What direction of electric field inside charged metal plate : A constant electric field of magnitude E = 779 V/m points in the positive x-direction. A charge Q is moved in positive x-direction within the field by an external force.

Annual maintenance and operation costs : The initial cost of a permanent park is $1,500,000. Annual maintenance and operation costs are $100,000 per year. Every 6 years, the park needs $400,000 to replace all facilities. At an annual interest rate of 10% per year, the capitalized cost of th..

Income from a certain operation is expected : Income from a certain operation is expected to be zero in years, one through three, after which and beginning at end of year 4, it will be $60000 per year forever. The capitalized cost, now of the income stream above at 10% per year is :

Apply the rules of procedure to fact patterns and cases : Identify the legal issues presented in case analysis - Summarize the steps involved in processing both a felony and misdemeanor case.

Illustrate on diagrams for the market and particular firm : Assume that a perfectly competitive, constant cost industry is in a long run equilibrium with 20 firms. Each firm is producing 70 units of output which it sells at the price of $18 per unit; out of this amount each firm is paying $2 tax per unit of t..

What is magnitude of the force on negatively charged object : What is the magnitude of the force on the negatively charged object due to the positively charged object? What is its direction? Show your work and explain your reasoning.

What would be the full economic price of this legislation : From California to New York, legislative bodies across the United States are considering eliminating or reducing the surcharges that banks impose on noncustomers, who make $12 million in withdrawals from other banks’ ATM machines. What would be the f..

Unit of leisure and returns collected revenue to consumer : Suppose there is a single consumer with U = Sl, where S is steaks and l is leisure time. Assume that the government can observe the leisure that is consumed. It taxes leisure consumed at t per unit of leisure and returns the collected ‘revenue’ to th..

Find the value of capacitance c : The equivalent capacitance of the capacitors shown in the figure (Figure 1) is 9.26 μF. Find the value of capacitance C.

User Account

All Pages