Explore BrainMass
Share

Output Decisions in Perfect Competition

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

Forgot how to solve this?

Micro

I need help how to solve this step by step

A perfectly competitive flip flops industry has the following demand an supply curves

Qs=16+p
Qd=80-p

a) what is equilibrium price and quantity?
b) a particular firm (summer flip flops) in the same industry (flip flop industry) has the following short run cost total cost function

Tc=64+q^2

How many flip flops does "summer flip flops" produce (always assume that the firm is maximizing profits)?
c) what is"summer flip flops" economic profit?
d) should the firm produce or shut down in the long run?
e) should the form produce or shut down in the short run?

© BrainMass Inc. brainmass.com October 10, 2019, 8:05 am ad1c9bdddf
https://brainmass.com/economics/demand-supply/output-decisions-perfect-competition-607403

Solution Preview

A perfectly competitive flip flops industry has the following demand an supply curves
Qs=16+p
Qd=80-p

A) What is equilibrium price and quantity?
Set Qs=Qd
16+p=80-p
2p=80-16=64
p=32

Qs=16+p=16+32=48
Qd=80-32=48
Equilibrium price=\$32
Equilibrium ...

Solution Summary

The solution depicts the steps to estimate the profit of a perfectly competitive firm. The equilibrium price and quantities are examined.

\$2.19