Stats Solutions

Solution: Consider a competitive industry with the following demand curve, y=110-p where y is the number of units demanded and p is the price per unit.

Question: Consider a competitive industry with the following demand curve,

\[y=110-p\]

where \(y\) is the number of units demanded and \(p\) is the price per unit. The industry consists of a number of identical firms, each with the following cost function :

\[c(y)=49+y^{2}\]
  1. Draw a graph showing each firm's marginal cost curve, average cost curve, and average variable cost curve. What is the minimum long run average cost in this industry?
  2. Suppose that there is free entry and exit in this industry. Estimate the number of firms you are likely to observe in this industry in the long run. Briefly explain your reasoning.
  3. Calculate the short run supply curve when there are \(N\) firms in this industry.
  4. What is the long run equilibrium price and what profits do firms make?

Price: $2.99
Solution: The downloadable solution consists of 2 pages
Deliverable: Word Document


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