Each of 10 firms in a perfectly competitive industry has the following costs:
Recall that, in perfect competition, the market supply curve is derived from the horizontal sum of each firm supply curve and each firm supply curve is the firm’s marginal cost curve. Each firm has the same cost curve and therefore is the same size and therefore will have the same market share.
a) What is the market equilibrium price that each firm gets for its product?
b) What is the market equilibrium quantity?
c) What is the equilibrium quantity each firm produces?
d) What profit is each firm making?
e) Below what price will firms begin to exit the market?
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