Calculate the firms short-run average cost

Assignment Help Microeconomics

Reference no: EM13182574

A perfectly competitive painted necktie industry has a large number of potential entrants. Each firm has an identical cost structure such that long-run average cost is minimized at an output of 20 units (qi=20). The minimum average cost is $10 per unit. Total market demand is given by Q=1,500-50P.

A) What is the industry's long-run supply schedule

B) What is the long-run equilibrium price (P*)? The total industry output (Q*)? The output of each firm (q*i)? The number of firms? The profits of each firm?

C) The short-run total cost curve associated with each firm's long-run equilibrium output is given by: STC=0.5q^2-10q+200 where SMC=q-10 calculate the firm's short-run average and marginal cost curves. At what necktie output level does short-run average cost reach a minimum?

D) Calculate the short-run supply curve for each firm and the industry supply curve.

E) Suppose now painted neckties become more fashionable and the market deman function shifts to Q=2,000-50P. Using this demand curve, answer part B for the very short run when firms cannot change their output.

F) In the short-run use the industry short-run supply curve to recaclulate the answers to part B.

G) What is the new long-run equilibrium for this industry?

Reference no: EM13182574

Questions Cloud

Calculate the sales-volume variance for each product : Calculate the sales-volume variance for each product and in total and calculate the sales-mix variance for each product and in total.

Analyze for which quantity it is optimal to use technology : You need to analyze for a hypothetical example whether John Deere should use Technology 1 (Own Production), Technology 2 (Versatile), or whether it should stop producing four-wheel-drive tractors based on the quantity the company predicts it woul..

Estimating uncollectible accounts under the allowance method : Explain how Magrath should account for and report the accounts receivable factored on April 3, 2007. Why is this accounting treatment appropriate?

Describe current parole and mandatory release policies. : What is parole? How does parole differ from mandatory release? Describe current parole and mandatory release policies. Is there a better solution to the current parole process?

Calculate the firms short-run average cost : A perfectly competitive painted necktie industry has a large number of potential entrants. Each firm has an identical cost structure such that long-run average cost is minimized at an output of 20 units (qi=20). The minimum average cost is $10 per..

Explain the presence of a double or triple bond : How would the presence of a double or triple bond help to determine the geometric shape of a molecule?

Advantages and disadvantages of simulation models : Write a report to your manager advising the advantages and disadvantages of simulation models

Want to convert the calcium carbonate to calcium chloride : Why do you think we need to convert the calcium carbonate to calcium chloride befoe we do our EDTA titrations? What specific condition in our titrations require this?

Why is ancient knowledge to be respected : Why is ancient knowledge to be respected? How and why is knowledge passed down from generation to generation important? How did Carole Pelletier learn from her Elders?

User Account

All Pages