A perfectly competitive industry has 70 identical firms in the short run, each of which has the
Question:
A perfectly competitive industry has 70 identical firms in the short run, each of which has the short-run cost curves listed in the following table.
Output
Average total cost
Average variable cost
Marginal
11
20.5
13.1
12
12
19.8
13
14
13
19.3
13.1
16
14
19.1
13.3
18
15
19
13.6
20
16
19.1
14
22
17
19.2
14.5
24
18
19.5
15
26
19
19.8
15.6
28
20
20.3
16.2
30
21
20.7
16.9
The industry demand is given in the next table
Price
Quantity demanded
11
3200
13
3000
15
2800
17
2600
19
2400
21
2200
23
2000
25
1800
27
1600
29
1400
31
1200
a)What is the shutdown point? What is the break-even point?
b)What amount of profit (or loss) is being made by each firm at the short-run equilibrium? Is this industry in long-run equilibrium at its present size?
c)What is the optimal number of firms in the long-run?
Expert Answer:
