ECON 301 Lecture Notes - Lecture 18: I2P, Average Cost
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Suppose that each firm in a competitive industry has the following costs:
Total Cost: TC=50+1/2 q2
Marginal Cost: MC=q
where q Β is an individual firm's quantity produced.
The market demand curve for this product is:Β
Demand QD=140-2P
whereΒ Β PΒ is the price and QΒ is the total quantity of the good.
Each firm's fixed cost is $__________
Β
What is each firm's variable cost?
_______ 50+1/2q
_______1/2q
_______q
_______1/2q2
Which of the following represents the equation for each firm's average total cost?
Β Β _____ 50/q
_______ 50/q+1/2q
_______1/2q
_______50+1/2q
Complete the following table by computing the marginal cost and average total cost forΒ Β Β Β from 5 to 15.
5 | Β | Β |
6 | Β | Β |
7 | Β | Β |
8 | Β | Β |
9 | Β | Β |
10 | Β | Β |
11 | Β | Β |
12 | Β | Β |
13 | Β | Β |
14 | Β | Β |
15 | Β | Β |
The average total cost is at its minimum when the quantity each firm produces (q) iquals ________
Which of the following represents the equation for each firm's supply curve in the short run?
_______1/2q2
______q
_____50-q
_____120-1/2q2
In the long run, the firm will remain in the market and produce if________
Currently, there are 8 firms in the market.
In the short run, in which the number of firms is fixed, the equilibrium price is__________Β In the short run, in which the number of firms is fixed, the equilibrium price is
________units. Each firm produces ________Β nits. (Hint: Total supply in the market equals the number of firms times the quantity supplied by each firm.)
In this equilibrium, each firm makes a profit of _______Β . (Note: Enter a negative number if the firm is incurring a loss.)
Firms have an incentive to EXIT/ENTERΒ the market.
In the long run, with free entry and exit, the equilibrium price is _______and the total quantity produced in the market is__________units. There are ________
firms in the market, with each firm producing _________units.