Question 5 (5 points) In the market for a particular identical good there are initially a...
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Question 5 (5 points) In the market for a particular identical good there are initially a large number of each of two types of producers: Type A and Type B. Type A producers use a better production technology than Type B producers, so Type A's average cost curve is lower than Type B's. Both types have upward-sloping marginal cost curves and U- shaped average cost curves. Which of the following statements is correct regarding the short-run and the long-run equilibria of this market? a) In the short-run equilibrium, Type B firms produce where the price equals their marginal cost (MC), while Type A firms produce where the price is above their MC. b) Type A firms all produce more in the long-run equilibrium than in the short- run equilibrium. Oc) In the long-run equilibrium, MC = AC for Type A firms, so their economic profits are zero. d) In the long-run equilibrium, both Type A and Type B firms produce at where the price equals their average cost (AC). Question 5 (5 points) In the market for a particular identical good there are initially a large number of each of two types of producers: Type A and Type B. Type A producers use a better production technology than Type B producers, so Type A's average cost curve is lower than Type B's. Both types have upward-sloping marginal cost curves and U- shaped average cost curves. Which of the following statements is correct regarding the short-run and the long-run equilibria of this market? a) In the short-run equilibrium, Type B firms produce where the price equals their marginal cost (MC), while Type A firms produce where the price is above their MC. b) Type A firms all produce more in the long-run equilibrium than in the short- run equilibrium. Oc) In the long-run equilibrium, MC = AC for Type A firms, so their economic profits are zero. d) In the long-run equilibrium, both Type A and Type B firms produce at where the price equals their average cost (AC).
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Related Book For
Introduction to Operations Research
ISBN: 978-1259162985
10th edition
Authors: Frederick S. Hillier, Gerald J. Lieberman
Posted Date:
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