Suppose that the wheat market is perfectly competitive. Market demand for wheat is given by the...

 

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Suppose that the wheat market is perfectly competitive. Market demand for wheat is given by the expression. = 80 5, where P is the market price per bag of wheat. The short-run market supply for wheat is given by the expression. = 20 + 20. Further, suppose that all firms are identical, and each firm has variable costs given by the expression. = +0.52. a) What is the short-run market price facing each firm? P = 4 b) What is the short-run profit-maximizing level of output for each firm? c) Now suppose we are now in the long run. Suppose that the firm's long-run total cost function is given as: = 2 + + 0.52. d) What is the long-run level of output that a representative firm would produce at? 32.5 firms e) Recall the market's demand curve is = 80 5. How many firms are in this market in the long run Suppose that the wheat market is perfectly competitive. Market demand for wheat is given by the expression. = 80 5, where P is the market price per bag of wheat. The short-run market supply for wheat is given by the expression. = 20 + 20. Further, suppose that all firms are identical, and each firm has variable costs given by the expression. = +0.52. a) What is the short-run market price facing each firm? P = 4 b) What is the short-run profit-maximizing level of output for each firm? c) Now suppose we are now in the long run. Suppose that the firm's long-run total cost function is given as: = 2 + + 0.52. d) What is the long-run level of output that a representative firm would produce at? 32.5 firms e) Recall the market's demand curve is = 80 5. How many firms are in this market in the long run

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ANSWER To solve this problem we need to use the given information about the wheat market the shortru... View the full answer