Long run equilibrium, Microeconomics

Assignment Help:

1. Suppose that a monopolistically competitive firm must build a production facility in order to produce a product.  The fixed cost of this facility is FC = $24.  Also, the firm has constant marginal cost, MC = $3.  Demand for the product that the firm produces is given by P = 27-3Q. 

a) Fill in the table below.  If any of your values have decimals, you may round to only one numeral after the decimal (nearest 10th of a dollar). 

Quantity of Output

Price

Total Cost

Average Total Cost

1

 

 

 

2

 

 

 

3

 

 

 

4

 

 

 

5

 

 

 

6

 

 

 

7

 

 

 

8

 

 

 

9

 

 

 

b) How much output will this firm produce if it maximizes profit?

c) What price should this firm charge if it wants to maximize profit?

2. Carefully explain what will happen as we move from the short run to a long run equilibrium in a monopolistically competitive industry if firms are making a positive profit in the short run.  Your explanation should clearly state what will happen to the demand curve facing an individual firm and the reason why this happens.


Related Discussions:- Long run equilibrium

Factors that make this demand less elastic, Question 1: The price of the go...

Question 1: The price of the good X rises from $1.30 to $1.40. Calculate the price elasticity of demand by using the mid-point method. Question 2: How do you explain the answer

Limitations of Valence Bond Theory, Valence Bond Theory Explains, but does ...

Valence Bond Theory Explains, but does not predict the shape. Valence Bond Theory Cannot explain colour and spectra. Valence Bond Theory Qualitative explanations; does not expl

Define the effects of monopoly, There are various implications of the monop...

There are various implications of the monopoly model; many of which lead to criticisms of monopoly on issues of both technical /allocative efficiency.  The prices and output verifi

Fiscal policy, 3. Which of the following would not be an expansionary fisca...

3. Which of the following would not be an expansionary fiscal policy? a.Increased welfare payments to the poor b.Decreases in federal taxes on corporations c.A balanced budget d.I

Working capital, Working Capital: A business requires a certain revolving f...

Working Capital: A business requires a certain revolving fund of finance to pay for regular purchases of initial labour, raw materials and other inputs to production. Working capit

Monopolist, if a monopolist makes economic profits, new firms enter the mar...

if a monopolist makes economic profits, new firms enter the market and compete with the monopolist in the long run.

Market supply labour, Use a graphical illustration to describe briefly what...

Use a graphical illustration to describe briefly what the influence of each of the following would be on the market supply of labor:(a) an increase in immigration (b) more women en

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