Provide me the full working process include the explaination if possible I have
ID: 1107196 • Letter: P
Question
Provide me the full working process include the explaination if possible
I have the answer but I dont know the working process
The market for nails is perfectly competitive. There are a total of 1,000 buyers and each one of them has an individual demand for nails (expressed in tonnes) given 1. by qo 20 P. There are a total of 30,000 producers of nails facing the following costs: FC-5, VC-5q, MC = 10q. The average total cost for a producer is minim ised at q = 1. (a) Market demand for nails is given by QD= (b) Average variable cost is given by AVCwhile average total (c) In the short run, the market supply curve is given by Qs . (d) In the short-run competitive equilibrium, the price of a tonne of nails is cost is equal to ATC= $.and the quantity of nails sold istonnes. tonnes of nails In the short run, an individual producer sells at a price of $ (e) An individual producer's total cost will be $, while total revenue will be $ (f) Hence, an individual producer makes a equal to $ (g) the In the long run, a number of individual producers will market. This number is be $ The long-run price in this market will and the quantity of nails sold in the market will be tonnes.Explanation / Answer
1.
A.
Individual demand qd = 20-P
No. of firms in the market = 1000
Hence market demand = 1000*individual demand =1000*(20-P)
Market demand Qd= 20000 – 1000P
B.
VC = 5Q^2
AVC = VC/Q = 5Q^2/Q
AVC = 5Q
TC = FC + VC = 5+5Q^2
ATC = TC/Q = (5+5Q^2)/Q
ATC = 5/Q + 5Q
C.
Supply curve = Marginal cost curve above AVC
30000*P = 10Qs
Qs = 3000P
Quantity supplied: Qs = 3000P
D.
At equilibrium,
Qd = Qs
20000 - 1000P = 3000P
P = $5
Quantity of nail sold = 20000 – 1000*5 = 15000
E.
total quantity sold = 15000
total producer = 30000
sales by individual producer = 15000/30000 = .5 Tonnes of nails
at a price = $5
F.
Total Cost of individual producer = 5+5Q^2 = 5+ 5*.5^2 = $6.25
Total Revenue = P*Q = 5*.5 = $2.5
Loss = total cost – total revenue = 6.25 - 2.5 = $3.75
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