the long run to the price of fertilizer, marginal cost, average total cost, the
ID: 1107742 • Letter: T
Question
the long run to the price of fertilizer, marginal cost, average total cost, the quantity supplied by each firm, and the total quantity supplied to the market. 10. The market for apple pies in the city of Ectenia is com- petitive and has the following demand schedule: Quantity Demanded 1,200 pies Price 1,100 1,000 900 800 700 600 500 400 300 200 100 2 4 10 12 13 Each producer in the market has fixed costs of $9 and the following marginal cost: Quantity 1 pie Marginal Cost $2 4 8 10 12 a. Compute each producer's total cost and average total cost for 1 to 6 pies.Explanation / Answer
a) Total cost is the sum of fixed and variable cost. FC here is $9 and so marginal cost generates the variable cost and this can be used to find TC. Now ATC = TC/Q
= 11*5 - (9 + 10*5) = b) At P = 11, each firm produces 5 pies.Quantity demanded and supplied is 200 units. There are total 200/5 = 40 producers in the market when P = 11. Profit per producer is TR - TC = (55 - 39) = $16
c) No because long run price is minimum of ATC which is $7 when each firm produces 3 units
d) There is no economic profit in long run. Market price is $7 and each firm will produce 3 units. At P = $7, Qd = Qs = 600 so there will be 600/3 = 200 firms.
Q MC FC VC TC ATC AVC 0 9 0 9 1 2 9 2 11 11.0 2.0 2 4 9 6 15 7.5 3.0 3 6 9 12 21 7.0 4.0 4 8 9 20 29 7.3 5.0 5 10 9 30 39 7.8 6.0 6 12 9 42 51 8.5 7.0Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.