Explore BrainMass
Share

Explore BrainMass

    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