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 possibility frontier ppf, Production possibility frontier PPF is...

Production possibility frontier PPF is a combination of two or more goods a which a country can make in a given timeline or period with resource fully employed.

Marginal revenue, Marginal Revenue, Marginal Cost & Profit Maximization ...

Marginal Revenue, Marginal Cost & Profit Maximization * Determining profit maximizing level of output - Profit (π ) = Total Revenue - Total Cost - Total Revenue (R) = Pq

A consumer sensitivity to interest rates, Interest rate sensitivity can als...

Interest rate sensitivity can also be understood from another perspective.  The total cost of a commodity is not just its price, but also what must be paid to borrow money to purch

Microeconomic international policy, Ask questi‘Social welfare functions emb...

Ask questi‘Social welfare functions embody a normative conception of the relative importance of equity and efficiency’. With the aid of diagrams, illustrate and explain this propos

Warehousing facilities and supply of trade information, Warehousing Facilit...

Warehousing Facilities: These should be expanded in important commercial centres abroad, specially for fast-moving consumer goods. Nowadays, foreign buyers are reluctant to keep

With calc, In this part, use the results for market demand for short-run an...

In this part, use the results for market demand for short-run and long run market supply of good x1 obtained in parts one and two. When a change (e.g. income or taxes) is introduce

What are externalities and corrective taxes, 1. What are externalities? Giv...

1. What are externalities? Give an example of positive and negative externality and explain why the market outcomes are inefficient in the presence of externalities? 2. What are

Problem Solving, Regardless of the market structure, oligopolist and the mo...

Regardless of the market structure, oligopolist and the monopolist maximize their TR when MR=0. Do you agree?

Current economic climate, a) Provide a detailed valuation of an equity inve...

a) Provide a detailed valuation of an equity investment decision in the current economic climate. Your briefing should include: i) A review of the 'top-down' analysis that led

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