$72 $68 $64 $60 $56 $52 $48 $44 $40 $36 $32 $28 $24 $20 $16 $12 $8 $4 $0 1,500 1,800 2,100 2,400 2,700 3,000 3.300 3,600 3,900 Market Supply and Demand Functions Cost Functions for a Typical Firm in the Industry $72 $68 $64 $60 $56 $52 $48 $44 $40 $36 $32 $28 $24 $20 $16 $12 $8 $4 $0 0 2 468 10 12 14 16 18 20 Consider the file Short Run & Long Run and ignore everything that happened in the previous two questions. Start from the beginning. Assume that this is an increasing-cost industry. Suppose that the demand for this product increases by 1,200 units and stays at this higher level for ever. In the long run, as new firms enter the industry, the demand for factors of production increases causing increases in wages and other input costs. This, in turn, causes the average cost of production to increase by 8 dollars (The ATC curve shifts up vertically by $8). Then, in the long run, the equilibrium price of the product will equal 40.00 dollars per unit, the equilibrium quantity 3200.00 units, and there will be 11.00 industry each making an economic profit of 56.00 firms in the dollars.

$72 $68 $64 $60 $56 $52 $48 $44 $40 $36 $32 $28 $24 $20 $16 $12 $8 $4 $0 1,500 1,800 2,100 2,400 2,700 3,000 3.300 3,600 3,900 Market Supply and Demand Functions Cost Functions for a Typical Firm in the Industry $72 $68 $64 $60 $56 $52 $48 $44 $40 $36 $32 $28 $24 $20 $16 $12 $8 $4 $0 0 2 468 10 12 14 16 18 20 Consider the file Short Run & Long Run and ignore everything that happened in the previous two questions. Start from the beginning. Assume that this is an increasing-cost industry. Suppose that the demand for this product increases by 1,200 units and stays at this higher level for ever. In the long run, as new firms enter the industry, the demand for factors of production increases causing increases in wages and other input costs. This, in turn, causes the average cost of production to increase by 8 dollars (The ATC curve shifts up vertically by $8). Then, in the long run, the equilibrium price of the product will equal 40.00 dollars per unit, the equilibrium quantity 3200.00 units, and there will be 11.00 industry each making an economic profit of 56.00 firms in the dollars.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

ChapterB: Differential Calculus Techniques In Management

Section: Chapter Questions

Problem 3E

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