Question 10 The egg industry is comprised of thousands of firms producing an ide

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Question 10 The egg industry is comprised of thousands of firms producing an identical product. Demand and supply conditions are indicated in the left-hand panel of the figure below; the long run cost curves of a representative egg producer are shown in the right-hand panel. Currently, the market price of eggs is $2 per dozen, and at that price consumers are purchasing 800,000 dozen eggs per day. In the long run, what will the equilibrium price of eggs be? (a) Market (b) Firm Price (S LMC Price & cost (S/unit) $2 LATC $2 1.50 0.50 800 1,200 1,600 2,000 2,400 1,000 2,300 Quantity (thousands of dozens) Quantity (dozens) a) Find the profit-maximizing quantity and price b) Calculate the firm's profit or loss

Explanation / Answer

Answer:- The long-run equilibrium will be accomplished where LATC curve attains its minimum point and the corresponding prices and quantity will represent the equilibrium price and equilibrium quantity.

As in the figure, the point LATC curve attains is the minimum value, the price is $1 and corresponding quantity is 2000 thus equilibrium price is $1 and the equilibrium quantity is 2000 units.

Answer:- In the long run, the perfectly competitive firm will earn zero profit and zero loss.

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