--%>

Question on ATC and MC

A perfectly competitive market within the long period:

Data
         firm A:  ATC = y2   4y + 12 and MC = 3y2 – 8y + 12
         firm B:  ATC = y2   4y + 10 and MC = 3y2 – 8y + 10
         firm C:  ATC = y2   4y + 8 and MC = 3y2 – 8y + 8
         market demand curve:  ym = 200   20py
Questions
a. Suppose that the minimum ATC for each of the firms takes place when they generate two units of output.  If the auctioneer calls out a market price of $6.00 that firm will ought to leave the market and why.
b. Find out the long period equilibrium market price, equilibrium market output, and the number of firms into the market.
c. If the market demand curve shifted towards the right and becomes 300 – 15py what would be the new equilibrium market price & market output?
d. Do the results of (b) and (c) support a supply and demand determination of the market price? Describe.

   Related Questions in Microeconomics

  • Q : Explain Production Possibility curve

    Elucidate Production Possibility curve with the help of a diagram? Answer: The Production Possibility Curve refers to a curve that shows various production possibil

  • Q : Influence of good on opportunity cost

    The law of demand defines that, all as well constant, consumers will obtain: (i) More of a good, the lower its opportunity cost. (ii) Less of any good, higher the prices of its substitutes. (iii) Advertised goods more often than generic products. (iv) Greater luxuries

  • Q : Elasticity of supply when product

    Since the supply of land is fixed, then the: (w) demand for land is absolutely horizontal. (x) supply of land is completely elastic. (y) demand for land is absolutely vertical. (z) supply of land is perfectly inelastic.

    Q : Interaction of demand and supply with

    Identify and explain the main economic factors that determine the price of a good or service. Please include how demand and supply interact and elasticity, etc. Also give examples with graphs.

  • Q : Marginal Utilities and Demand Prices

    Can someone help me in finding out the right answer from the given options. Rational individual consumers tend to purchase goods until the relative market prices for each and every goods purchased are proportional to all individuals: (i) Cost or benefit ratio. (ii) Op

  • Q : Levels of recent interest rate When

    When households become ever more willing to sacrifice future consumption therefore that they can enjoy greater levels of recent consumption, in that case the: (w) interest rate rises. (x) interest rate falls. (y) present value of future income rises. (z) equilibrium r

  • Q : Question on lowering the supply The

    The Reagan Administration introduced new agricultural program named as the Payment-in-Kind Program, in the year of 1983. In order to distinguish how the program worked, let's assume the wheat market. Now assume the government desire to lower the supply of whe

  • Q : Increase output to increase profit When

    When the last unit produced and sold adds $100 to revenue of a firm and $75 to its costs, this will: (a) increase output to increase profit. (b) reduce output to increase profit. (c) maintain similar level of output to maximize profit. (d) shut down.

    Q : Absolute value of price elasticity of

    The absolute value of price elasticity of demand is generally greater when there: (w) are fewer uses for the good. (x) is more time permitted for buyers to adjust. (y) are fewer substitutes for the good. (z) is a lower elasticity of s

  • Q : Ultimate lenders and borrowers

    Financial intermediation is a process wherein financial institutions: (w) incur substantial outflows of funds. (x) facilitate financial flows by eventual lenders to eventual borrowers. (y) face rigid reserve requirement ratios. (z) experience "runs" w