Calculation of profit maximizing output level

Reference no: EM1315732

The following table fives quantity supplied and quantity demanded at various prices in the perfectly competitive meat packing markets:

Prices (per lb.)	Qs	Qd (in millions of lbs.)
$1	10	100
$1.25	15	90
$1.50	25	75
$1.75	40	63
$2.00	55	55
$2.25	65	40

Assume that each firm in the meat-packing industry faces the following cost structure:

Pounds	TC
60,000	$110,000
61,000	$111,000
62,000	$112,000
63,000	$115,000

1. What is the profit maximizing output level for the typical firm? (Hint: Calculate MC for each change in output, then find the equilibrium price, and calculate MR for each change in output)

2. Is this market in long-run equilibrium? Why or why not? ( Hint: Calculate ATC)

3. What do you expect to happen to the number of meat packing firms over the long run? Why?

Reference no: EM1315732

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