1. How many items will be sold? What will the price/unit be? What will profit be
ID: 2441566 • Letter: 1
Question
1. How many items will be sold? What will the price/unit be? What will profit be? What will average cost/unit be?
2. Is the market in equilibrium?
3. There are 24 firms in the market. How many total items are sold in the market and what is the total cost for all firms?
4. If items sold remained constant under increased competition, but number of firms was reduced so each was operating at point of minimum average cost, how many stores would be in operation? Why?
5. Now that few firms have closed, what would be total costs of all remaining stores taken together?
Suits sold (per hour) Price TC TR AR MR AC MC 1 $31.50 $70.00 $31.50 $31.50 $70.00 2 $28.50 $80.00 $57.00 $28.50 $25.50 $40.00 $10.00 3 $25.50 $85.00 $76.50 $25.50 $19.50 $28.33 $5.00 4 $22.50 $90.00 $90.00 $22.50 $13.50 $22.50 $5.00 5 $19.50 $100.00 $97.50 $19.50 $7.50 $20.00 $10.00 6 $16.50 $115.00 $99.00 $16.50 $1.50 $19.17 $15.00 7 $13.50 $136.00 $94.50 $13.50 -$4.50 $19.43 $21.00 8 $10.50 $164.00 $84.00 $10.50 -$10.50 $20.50 $28.00 9 $7.50 $200.00 $67.50 $7.50 -$16.50 $22.22 $36.00 10 $4.50 $245.00 $45.00 $4.50 -$22.50 $24.50 $45.00Explanation / Answer
1) at profit maximisation MR is greater or close to MC so the number of items that will be sold 4
Price = $22.50 and profit = TR - TC = 90 -90 = 0
2) yes the Market is in equilibrium because the long run economic profit is zero.
3) total items = 24 * 4 = 96.
Total cost for all the firms = 90*24 = 2160
4) AC is minimum when Q = 6. The quantity is output is same therefore 96 = 6N
N = 96 / 6 = 16 stores
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.