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The Market for Pool Rafts
The market for pool rafts in Playa del Largarto is competitive and includes no transaction costs. Five suppliers are willing to sell pool rafts in Playa del Largarto at the following prices: $32, $28, $20, $13, and $10. Five buyers are willing to buy pool rafts at the following prices: $10, $12, $20, $28, and $32.
a) Illustrate the supply and demand for pool rafts in Playa del Largarto of using a graph.
b) What is the equilibrium price and quantity in this market?
c) What is the consumer surplus in this market?
d) What is the producer surplus in this market?
Long Run Average Cost (or LAC) -Constant Returns to Scale If the input is doubled, the output will double and average cost is constant at all the levels of output.
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