[This question concerns long-run equilibrium so all variables in the questions are long-run.] Suppose Firm X has a cost function C(q) = q3 - 20q2 + 150q, from which we can derive its average cost function and marginal cost function as: AC(q) = q2 – 20q + 150, MC(q) = 3q2 – 40q +150. In each of the following 3 questions, you are given 2 statements—a price/quantity information and a market structure. In each question, determine and explain whether the 2 statements are consistent with each other. The long-runpriceis $73 and Firm X produces 11units. Firm X is in a perfectly competitive industry The long-run price is $73 and Firm X produces 11 units. Firm X is in a competitive selection industry. The long-run price is $75 and Firm X produces 5units. Firm X is in a monopolistically competitive industry.
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[This question concerns long-run equilibrium so all variables in the questions are long-run.]
Suppose Firm X has a cost functionC(q) = q3 - 20q2 + 150q,
from which we can derive its average cost function and marginal cost
function as:
AC(q) = q2 – 20q + 150, MC(q) = 3q2 – 40q +150.
In each of the following 3 questions, you are given 2 statements—a price/quantity information and a market structure. In each question, determine and explain whether the 2 statements are consistent with each other.
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The long-runpriceis $73 and Firm X produces 11units. Firm X is in a
perfectly competitive industry -
The long-run price is $73 and Firm X produces 11 units. Firm X is in a competitive selection industry.
-
The long-run price is $75 and Firm X produces 5units. Firm X is in a
monopolistically competitive industry.
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