Business
Microeconomics
The long run average cost curve for a competitive firm

The long run average cost curve for a competitive firm is AC = 35 10q +

Question:

The long run average cost curve for a competitive firm is AC = 35 − 10q + q².

a. Use the Excel Solver tool to find the cost-minimizing quantity. Enter the labels q and AC in cells A1 and B1. Enter the formula for AC in cell B2. Select the Data tab then select the Solver tool.²³ A dialog box will appear. Enter B2 in the Set Objective row, select Min, and enter A2 in the “By Changing Variable Cells” row. Then select Solve. What is the cost-minimizing quantity? What is AC at this quantity?

If you do not see the Solver tool you need to load it first. Look up Solver in the Excel help facility for instructions.

b. This firm is one of many identical firms in a competitive industry that is in long run equilibrium. The market demand function for this industry is Q = 620 − 8p. Use Excel to determine the industry quantity.

c. How many firms are in this industry in the long-run competitive equilibrium?

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Individual firmss cost function AC 35 10q q Market demand Q 620 8...View the full answer

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Related Book For book-img-for-question

Managerial Economics and Strategy

ISBN: 978-0134167879

2nd edition

Authors: Jeffrey M. Perloff, James A. Brander

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Question Posted: Jul 23, 2018 09:14 AM

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