Question
In 2010, the box industry was perfectly competitive. The lowest point on the long-run average cost curve of each of the identical box producers is
In 2010, the box industry was perfectly competitive. The lowest point on the long-run average cost curve of each of the identical box producers is $4, and this minimum point occurs at an output of 1,000 boxes per month. The market demand curve for boxes is
QD= 140,000 - 10,000 P,
where P is the price of a box (in dollars per box), and QDis the quantity of boxes demanded per month. The market supply curve for boxes is
QS= 80,000 + 5,000 P,
where QSis the quantity of boxes supplied per month.
a. What was the equilibrium price of a box? Is this the long-run equilibrium price?
b. How many firms are in this industry when it is in long-run equilibrium?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started