Question: Now assume that in addition to firm X (from question 3) there are 39 other firms operating in the industry and that the cost schedules of these other firms are identical to those of firm X. Assume, too, that the industry demand schedule is given by the table below on the left. Please complete the firm and industry (40 identical firms) supply schedules; hint: What is firm X’s supply schedule in a competitive industry .

Demand Schedule Firm and Industry

Facing the Industry Supply Schedules

Supply Per Day

One 40

Price Units Sold Per Day Price Firm Firms

$17.50 400 $17.50

$16.50 600 $16.50

$15.50 800 $15.50

$14.50 1000 $14.50

$13.50 1200 $13.50

$12.50 1400 $12.50

$11.50 1600 $11.50

$10.50 1800 $10.50

$9.50 2000 $9.50

Please complete the preparation of the table above on the right showing the supply schedule for one and for all 40 firms in the industry and then answer the following questions.

1. What is the short run equilibrium price in the industry, given that there are 40 producers?
2. What is the short run equilibrium rate of output of the industry?
3. How much profit does each firm make per day when the industry is in short run equilibrium with 40 firms?
4. What is the long run equilibrium price of the product sold by this industry, assuming the industry uses non-specialized resources?
5. What is the long run equilibrium rate of output of the industry?
6. Assuming that each new firm entering the industry has the same cost schedules as those of firm X, how many firms will be operating in the industry when it reaches long-run equilibrium?

Price: $2.99

Solution: The downloadable solution consists of 3 pages
Deliverable: Word Document