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# constant-cost industry

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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?

https://brainmass.com/economics/general-equilibrium/constant-cost-industry-308233

#### 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 Summary

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

\$2.19