Purchase Solution

constant-cost industry

Not what you're looking for?

Ask Custom Question

Use the graph in the second column of page 257 under question 17 to answer the following. It shows the marginal cost and average total cost curves for the shoe store Zapateria, a perfectly competitive firm. a. How many pairs of shoes will Zapateria produce if the market price of shoes is $70 a pair? b. What is the total profit Zapateria will earn if the market price of shoes is $70 a pair? c. Should Zapateria expect more shoe stores to enter this market? Why or why not? d. What is the long-run equilibrium price in the shoe market assuming it is a constant-cost industry?

Attachments
Purchase this Solution

Solution Summary

What is the long-run equilibrium price in the shoe market assuming it is a constant-cost industry?

Solution Preview

a)How many pairs of shoes will Zapataria produce if market price of shoes is $70 a pair?
In a perfectly competitive environment MC= P meaning thereby MC=$70 a pair
So, Let us find quantity corresponding to MC=$70 from the given graph, we get Quantity=500 pairs.
Zapataria will produce 500 pairs ...

Solution provided by:
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution


Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.