A firm in a purely competitive industry is currently producing 1000 units per day at a total cost of $450. If the firm produced 800 units per day, its total cost would be $300, and if it produced 500 units per day, its total cost would be $275.
- What is the firm's ATC per unit at these three levels of production?
If every firm in this industry has the same cost structure, is the industry in long-run competitive equilibrium?From what you know about these firms' cost structures, what is the highest possible price per unit that could exist as the market price in long-run equilibrium? If that price is the market price and if the normal rate of profit is 10%, how big will each firm's accounting profit be (per unit)?
A firm in a purely competitive industry is currently producing 1000 units per day at a total cost of $450. If the firm produced 800 units per day, its total cost would be $300, and if it produced 500 units per day, its total cost would be $275.
- What is the firm's ATC per unit at these three levels of production?
If every firm in this industry has the same cost structure, is the industry in long-run competitive equilibrium?From what you know about these firms' cost structures, what is the highest possible price per unit that could exist as the market price in long-run equilibrium? If that price is the market price and if the normal rate of profit is 10%, how big will each firm's accounting profit be (per unit)?