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(Solved): 3a. How much output will each firm produce in the long-run? Hint: Long run equilibrium of the firm i ...
3a. How much output will each firm produce in the long-run? Hint: Long run equilibrium of the firm is determined by the minimum of the AC curve, where AC = MC.
3b.What would be teh long-run equilibrium price? Hint: p = AC = MC. Substitute the value of q (that you got in question 3a) in AC.
3c. Suppose the market demand is given by Q = 200 - 2p. How many firms will operate in teh industry in teh long-run? Hint: . In the long-run, firms’ supply is horizontal at minimum AC which is the price. Substitute the price (that you got in question 3c) in the market demand equation. You will get the market quantity. Divide that by quantity produced by each firm.
- Suppose that all firms in a competitive industry have the following long-run total cost function: - Each farm's average cost: - Each farm's marginal cost: - The long-run equilibrium of a firm is determined by the minimum of the curve. The is at a minimum where - In the long-run, a firms' supply is horizontal at minimum - If all firms are identical, the long-run market supply is also horizontal at
Expert Answer
To answer these questions, we need some additional information. Specifically, we need the cost funct...