# Determing output and profit of a perfectly competitive firm

Please refer attached file for graph.

Use the accompanying graph, which shows the marginal cost and average total cost curves for the store Zapateria, a perfectly competitive firm.

a.How many pairs of shoes will Zapateria produce if the market price of shoes id $70 a pair?

b.What is the total profit Zapateria produce 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/determing-output-and-profit-of-a-perfectly-competitive-firm-282343

#### Solution Preview

For Graphs, Please refer attached file.

Solution:

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 ...

#### Solution Summary

Solution describes the methodology to find out output and profit of perfectly competitive firm for a given market price level. It also determines long run equilibrium price in the market.