Updated Chapter
9. Problems and Applications Q9
· P1 illustrates the present situation for the typical firm in the market
· S1 indicates the corresponding supply curve.
10. Problems and Applications Q10
|
Quantity |
Total cost |
Average total cost |
|
1 |
7 |
7 |
|
2 |
10 |
5 |
|
3 |
18 |
6 |
|
4 |
28 |
7 |
|
5 |
40 |
8 |
|
6 |
54 |
6 |
At a price of $11, 200 pies are sold in the market. Each producer makes 4 pie, so there are 50 producers in the market, each making profit of $16
The market is in equilibrium: False
In the long run each producer earns a profit of $0, The market price $5. At this price, 800 pies are sold in the market each producer makes 2 pies. So there are 400 producers operating