, Classof1, Class of 1, Classofone, Class of one, Cof1, Co1,
Classof1 would shut down on 31st october 2014. Thank you for your support.
HomeSolution LibraryEconomicsMicroeconomics › Solution ID 7402

This solution has not been downloaded by you.

Download now to rate and review the solution!

Short run, long run market price change in perfect competitive market.

Views (1218)

Firm Z, operating in a perfectly competitive market, can sell as much or as little as it wants of a good at a price of $16 per unit. Its cost function is C = 50 + 40Q + 2Q2. The associated marginal cost is
MC = 4 + 4Q and the point of minimum average cost is Qmin = 5.
a. Determine the firm's profit-maximizing level of output. Compute its profit.
b. The industry demand curve is Q = 200 - 5P. What is the total market demand at the current $16 price? If all firms in the industry have cost structures identical to that of firm Z, how many firms will supply the market?
c. The outcomes in part a and b cannot persist in the long run. Explain why. Find the market\'s price, total output, number of firms, and output per firm in the long run.
d. Comparing the short-run and long-run results, explain the changes in the price and in the number of firms.

Reviews & Ratings

You can help other students Rate this Solution!
Be the first to review this solution!
$ 3.99 Original Price: $ 6.99 Solution document is in Pdf format

Buy Now is a safe, secure and trusted website as certified by Norton Secure (powered by VeriSign)
About Us | Terms of Use | Privacy Policy Copyright © 2002-2014 Classof1. All rights reserved.
Get live-chat assistance at
Get live-chat assistance at