In a perfectly competitive market there are 100 small firms, all of whom have th
ID: 1122428 • Letter: I
Question
In a perfectly competitive market there are 100 small firms, all of whom have the same cost structure. You run one of these firms, with total cost quantity in the table below: Student, Inc. 10 0 $400 7.00 2 $800 3 $10.00 4 $12.50 5 $16.00 $20 50 $26.00 $32.00 $38 50 10 $46.00 Complete the table above, and plot and LABEL the important curves needed to analyze your business. How many units should you produce? How much is your profit or loss? What will change in this market in the long.nun, ceteris paribus? 1 234 5 678910 How many units should you produce? How much is your profit or loss? What will change in this market in the long.run, ceterls paribus? How many units should you produce? How much is your profit or loss? What will change in this market in the long run, ceteris paribus How many units should you produce?Explanation / Answer
Q Total Cost TFC TVC AFC AVC ATC MC Total revenue Profit TR AT p=3.13 PROFIT at P =$3.13 TR at P = $2.13 Profit at P=$2.13 TR at P= $6.13 Profit at P =$6.13 0 4 4 0 -4 0 -4 0 -4 0 -4 1 7 4 7 4 7 7 3 1.13 -5.87 3.13 -3.87 2.13 -4.87 6.13 -0.87 2 8 4 4 2 2 4 1 2.26 -5.74 6.26 -1.74 4.26 -3.74 12.26 4.26 3 10 4 3.3 1.3 1.1 3.3 2 3.39 -6.61 9.39 -0.61 6.39 -3.61 18.39 8.39 4 12.5 4 3.1 1 0.8 3.1 2.5 4.52 -7.98 12.52 0.02 8.52 -3.98 24.52 12.02 5 16 4 3.2 0.8 0.6 3.2 3.5 5.65 -10.35 15.65 -0.35 10.65 -5.35 30.65 14.65 6 20.5 4 3.4 0.7 0.6 3.4 4.5 6.78 -13.72 18.78 -1.72 12.78 -7.72 36.78 16.28 7 26 4 3.7 0.6 0.5 3.7 5.5 7.91 -18.09 21.91 -4.09 14.91 -11.09 42.91 16.91 8 32 4 4 0.5 0.5 4 6 9.04 -22.96 25.04 -6.96 17.04 -14.96 49.04 17.04 9 38.5 4 4.3 0.4 0.5 4 6.5 10.17 -28.33 28.17 -10.33 19.17 -19.33 55.17 16.67 10 46 4 4.6 0.4 0.5 4.6 7.5 11.3 -34.7 31.3 -14.7 21.3 -24.7 61.3 15.3 a) At = $1.13 Q= 2, Loss= -5.87 In long run because of loss more firms will exit market this will reduce supply and prie will rise thus profits will increase. b) at p= $3.13 Q = 4 , Profit = 0.02 In the long run more firms will enter and supply will increase till profits are reduced to zerro. C) at Price =$2.13. Q = 3 Profit = -3.61. In the long run firms will exit Supply will decrease. D) A price = $6.13 Q =8, Profit = $17.04 In the long run firms will enter till profits are reduced to 0. Supply will increase.
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