Long run eq, Microeconomics

Assignment Help:
The raspberry growing industry is a perfectly competitive industry. The firms in the industry have a U-shaped LAC, minimum average cost is $8 and the minimum efficient scale is 4 units of X. The market demand curve is given by Q = 48-P.
a. Determine the long-run equilibrium price, quantity per firm, market quantity and number of firms. What profit does each firm earn in long-run?
b. Suppose that the government imposes a per-unit tax of $2 on the firms in the industry. Analyze the long-run effects of the policy. Draw a two part diagram (one for the typical firm and one for the market) to show the long-run effect of the policy on the industry.
c. Instead of a per-unit tax above, suppose that the government is considering of imposing a lump-sum tax. What would the effect of the lump-sum tax be on the long-run equilibrium price? Will firms enter or exit the industry?

Related Discussions:- Long run eq

Production function for wheat, Production Function for Wheat *  Farmers...

Production Function for Wheat *  Farmers should choose between a capital intensive or labor intensive technique of production. Isoquant Describing Production of Wheat

Describe the different pricing strategies of firms, Question: (a) With...

Question: (a) With reference to the characteristics of market structure, describe why the market for powdered milk in Mauritius is an appropriate example of monopolistic compe

Demand and supply considerations of education, Normal 0 false ...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

PRESENT VALUE FUTURE PAYMENTS, How does an increase in the size of a future...

How does an increase in the size of a future payment affect the present value of a future payment

OLIGOPOLY, EXPLAIN KINKED DEMAND CURVE

EXPLAIN KINKED DEMAND CURVE

Determine the four partial elasticities of demand, The demand functions for...

The demand functions for two related commodities are expressed as follows    Q 1 = (12P 2 3/4 ) / (P 1 1/2 ) Q 2 = (24P 1 2 ) / (P 2 3/5 ) Where Q 1  and Q 2 are d

Price elasticity of demand, Problem: (a) Given TR = P×Q, Show that...

Problem: (a) Given TR = P×Q, Show that  Note: TR is total revenue, P refers to price, Q refers to quantity demanded, MR denotes marginal revenue, and ε d shows the p

Balance of payment, Balance of payment: It is an account that summariz...

Balance of payment: It is an account that summarizes a country’s total payments and total receipts from international economic transactions within a specific period usually on

Compare and contrast the macroeconomic performances , 1. Assessment Criteri...

1. Assessment Criteria The coursework will be marked on the overall outcome including: structure, quality of reasoning, quality of written English, data analysis, referencing, sty

Schools and subsidies, Use two market diagrams to explain how an increase i...

Use two market diagrams to explain how an increase in state subsidies to public colleges might affect tuition and enrollments in both public and private colleges.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd