QUESTION 4 long-run total cost given by TC-20+ 20q2 operates in a competitive in

Question

QUESTION 4 long-run total cost given by TC-20+ 20q2 operates in a competitive industry where the short-run market demand and supply curves are given by oD-1,400-40 o a. 2 units e b. 4 units C 1 unit Pand Qs- -400+20 P. if it continues to operate in the long run, its profit-maximizing level of output is d6units Oe. 5 units QUESTION S 10 Producer surplus is defined as: o a the difference between the price the consumer actually pays for a product and the consumers reservation price o b. the difference between the price received by the producer and the producers reservation price C the profit that the firm earns on each unit of a product sold O d. the profit that the firm earns after taxes Oe.the difference between the price paid by the consumer and the price received by the consumer

Explanation / Answer

4) In the long run a firm produces q* units at which AC is minimum. Here AC = TC/q = 20/q + 20 + 5q. Minimizing it will imply dAC/dq = 0

-20/q^2 + 5 = 0

q^2 = 4 and so long run level of output per firm is q = 2 units Select A (2 units)

5) Option B because it is the area between the price line and the minimum acceptable price by the sellers.

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

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