Each existing firm and every potential entrant faces an


The cobalt mining industry is perfectly competitive. Each existing firm and every potential entrant faces an identical U-shaped average cost curve. The minimum level of average cost is $10 per ton and occurs when a firm produces 5 million tons of cobalt per year. The market demand curve for cobalt is D(P) = 810-P, where D(P) is the demand for cobalt in millions of tons per year when the market price is P dollars per ton. What is the long-run equilibrium price for cobalt? How much cobalt does each producer make at this equilibrium price? How many active cobalt producers will be in the market?

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Econometrics: Each existing firm and every potential entrant faces an
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