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(All Steps) Each of 10 firms in a given industry has the costs given in columns 1 and 2. The market demand schedule is given in columns 3 and 4. Quantity Total

Question: Each of 10 firms in a given industry has the costs given in columns 1 and 2. The market demand schedule is given in columns 3 and 4.

Quantity Total Cost Price Quantity Demanded
0 12 2 100
1 24 4 90
2 27 6 80
3 31 8 70
4 39 10 60
5 51 12 50
6 73 14 40
7 99 16 30

  1. What are the market equilibrium price and the price that each firm gets for its product?

  2. What are the equilibrium market quantity and the quantity that each firm produces?

  3. What profit is each firm making? If the industry is perfectly competitive, what will happen in the long run?

  4. Below what price will firms begin to exit the industry?

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Solution: The downloadable solution consists of 3 pages
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