1. Assume that the most efficient production technology available for making vitamin pills has the cost structure given in the following table. Note that output is measured as the number of bottles of vitamins produced per day and that costs include a normal profit. LO1

a. What is TAC per uniot r f each vlel of output listed in the table?

b. Is this a deecarsing-cost industyr? (Anws er yes or no).

c. Suppose that the meatr kprice for a bottle of vitamins is $2.50 and that at that price the total market quantity demanded is 75,000,000 bottles.
How many firms will there be in this industry?

d. Suppose that, instead, the meatr kquantity demande d at a price of $2.50 is only 75,000. How many firms do you expect there to be in this industry?

e. Review your anws ers to parts

b, c, ando eds. tDhe level of demand determine this industry’s market structure?

Transcribed Image Text:

Output TC MC 25,000 $100,000 $0.50 50,000 150,000 1.00 75,000 187,500 2.50 100,000 275,500 3.00