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

Non-existence of objective probability distributions, Non-existence of Obje...

Non-existence of Objective Probability Distributions :   Let us see why expectations are volatile in nature? According to Keynes (1936, pp. 149): "Our knowledge of the fact

Supply-and-demand, Suppose we divide Canada into three regions; the west, t...

Suppose we divide Canada into three regions; the west, the centre and the each

Explain how a country can peg its currency, Explain how a country can peg (...

Explain how a country can peg (fix) its currency to another currency. Explanation of a pegged/fixed currency should centre on how the central bank uses the currency market mech

Industrial policy, Industrial Policy: Government policies which are aimed a...

Industrial Policy: Government policies which are aimed at fostering the domestic development of particular desirable or productive industries, in order to enhance productivity, cre

Profit margin, Profit Margin A measure of organization performance, pro...

Profit Margin A measure of organization performance, profit margins measure the percentage return an organization is earning over the cost of production of the items sold.

Special drawing rights - imf, Special Drawing Rights: The late 1960s w...

Special Drawing Rights: The late 1960s witnessed that the growth in world resources did not keep pace with the growth in international trade. The slackness in the growth of re

Pest analysis and economic factors, PEST analysis Political fact...

PEST analysis Political factors: The political factors include laws and regulations in the market and this influences the market activities. These laws and regulations a

Demand and supply, what happens when price is fix and there is a change of ...

what happens when price is fix and there is a change of the supply and demand curve

Define the term entrepreneurship, Define the term Entrepreneurship Ent...

Define the term Entrepreneurship Entrepreneurship :   An entrepreneur is an individual who takes risks and organises the factors of production to make a product and therefore

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