The market for cashews is perfectly competitive and comprised of fifty (50) firm

Question

The market for cashews is perfectly competitive and comprised of fifty (50) firms with identical cost structures and U-shaped ATC curves. The market demand curve for cashews is downward-sloping. The industry is initially in long run equilibrium at the following market price and quantity: P astir = dollar 4/pound Q astir = 50 pounds of cashews Which of the following is equal to dollar 4/pound for the representative firm in the long run equilibrium described by your diagrams? Price Marginal Revenue Marginal Cost Average Total Cost I and II only I, II, and III only Ill and IV only I, II, III, and IV The individual cashew firm in the long run equilibrium described by your diagrams produces of cashews and earns economic profit. 1 Ib.; zero 1 lb.; positive 50 lbs.; zero 50 lbs.; positive

Explanation / Answer

In Long Run

Price equals Minimum Average Total Cost and there are zero economic profits.

Firms will still produce at the output level where MC=MR and strive constantly to lower thier cost

Therefore, P=MR=MC=AR=Min ATC

For 1st one D is Correct

For Second One C is Correct

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.