Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In the perfectly competitive gold ring market, B. & F. Baggins Enterprises is one of a number of identical firms supplying the market. The firm's

In the perfectly competitive gold ring market, B. & F. Baggins Enterprises is one of a number of identical firms supplying the market. The firm's long-run total cost function has the form TC(Q) = 36Q - 10Q2 + Q3. The Market demand is given by the equation P = 21 - 0.01Q

(a) Derive expressions for Baggins Enterprises' long-run average cost (AC) and long-run marginal cost (MC) as functions of Q.

(b) Determine the level of Q at which AC(Q) reaches its minimum value.

(c) In long-run equilibrium, what are the price p and quantity Q of gold rings exchanged and the total number of firms in the industry?

(d) Repeat (c) if (beginning at the equilibrium in (c)) market demand becomes P = 31 - 0.01Q, and briefly describe the adjustment process toward the new long-run equilibrium.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Microeconomics

Authors: Robert Frank

7th Edition

1260111083, 9781260111088

More Books

Students also viewed these Economics questions

Question

How do you get total sales to dealers in excel

Answered: 1 week ago