Consider an industry with n identical firms, each having a cost function c(q) = F +...
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Consider an industry with n identical firms, each having a cost function c(q) = F + q²/4. Compute the price and output per-firm in a long-run competitive equilibrium. How does your answer to part (a) change when F increases? Explain your answer. a) b) c) d) Let the demand function be Q = 2/P2, where Q is the aggregate industry output and P is the price. Compute the number of firms in a long-run competitive equilibrium. How will the number of firms in the industry change when F increases? Explain your answer. Now assume that the cost function of each firm is c(q) = 8 + kq²/2, where k is a positive parameter. Solve for the long-run competitive equilibrium and explain what happens when k increases. In 1940, it took 420 pounds of feed and 8.5 worker-hours to raise one 3.5 pounds chicken. After the 1950's a revolution began in commercial production of chicken; by 1980 it took 192 pounds of feed and 0.1 worker-hours to raise a 3.5 pounds chicken. What do you think happened to the price of chicken and to the overall level of production? Relate your answer to your answer in part (d). Consider an industry with n identical firms, each having a cost function c(q) = F + q²/4. Compute the price and output per-firm in a long-run competitive equilibrium. How does your answer to part (a) change when F increases? Explain your answer. a) b) c) d) Let the demand function be Q = 2/P2, where Q is the aggregate industry output and P is the price. Compute the number of firms in a long-run competitive equilibrium. How will the number of firms in the industry change when F increases? Explain your answer. Now assume that the cost function of each firm is c(q) = 8 + kq²/2, where k is a positive parameter. Solve for the long-run competitive equilibrium and explain what happens when k increases. In 1940, it took 420 pounds of feed and 8.5 worker-hours to raise one 3.5 pounds chicken. After the 1950's a revolution began in commercial production of chicken; by 1980 it took 192 pounds of feed and 0.1 worker-hours to raise a 3.5 pounds chicken. What do you think happened to the price of chicken and to the overall level of production? Relate your answer to your answer in part (d).
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Part a LongRun Competitive Equilibrium LRC Equilibrium In a longrun competitive equilibrium each firm Operates at minimum average cost MAC Earns zero ... View the full answer
Related Book For
Managerial economics applications strategy and tactics
ISBN: 978-1439079232
12th Edition
Authors: James r. mcguigan, R. Charles Moyer, frederick h. deb harris
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