Purchase Solution

long run market equilibrium price and output

Not what you're looking for?

Ask Custom Question

Q1. Ten competitive sawmills currently supply lumber to a market whose demand q,
depends on lumber price, p, as follows:
q = 3550 - 350p.
The cost function of each mill is identical:
Ci = 5qi + 0.05qi2 + 80 i = 1........10
(a) Determine the market supply curve.
(b) Determine the short run equilibrium market price and output.
(c) Is the equilibrium in (b) also a long run equilibrium? Why or why not?
(d) Technical development changes the cost function of new mills to:
Cj = 5qj + 0.1qj2 + 22.5
Ninety new competitive mills enter the market. What becomes the new short-run equilibrium market price and output? Assume the old mills still operate and that the entry and exit of mills do not affect individual mill cost functions.
(e) What will be the long run market equilibrium price and output? How many mills of what type - new or old - will survive?

Attachments
Purchase this Solution
Solution Summary

The long run market equilibrium price and output are determined.

Purchase this Solution
Free BrainMass Quizzes
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.

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.

Economics, Basic Concepts, Demand-Supply-Equilibrium

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

View More Free Quizzes
Related BrainMass Solutions

  • Competitive Markets

    Then the market price = long-run equilibrium price for individual firms = minimum average cost. (c) What is the lowest price at which each firm would sell its output in the long run? Is profit positive, negative or zero at this price?

  • long run competitive equilibrium

    Assuming that all firms are identical, and that the market is characterized by pure competition, (a) Find the equilibrium price, the equilibrium quantity, the output supplied by each firm and the profit of the firm in the short run.

  • Profit maximization and Competitive Supply

    Then the market price = long-run equilibrium price for individual firms = minimum average cost. (c) What is the lowest price at which each firm would sell its output in the long run? Is profit positive, negative or zero at this price?

  • Substitute good

    What will happen in the short run to:   a. The market supply and demand curves   b. Market  price   c. Market  output   d. The firm's output e. The firm's profit How about in the long run?

  • Detemining equilibrium price and quantity of boxes

    Qd=140000-10000*4=100000 Qs = 80000+5000*4=100000 Number of firms=Market demand/output of single firm at long run equilibrium =100000/1000=100 Solution describes the steps for detemining equilibrium price and quantity for boxes

  • Determining long run and short run equilibrium

    212692 Determining Long Run and Short Run Equilibrium See the attached file. Q5.

  • Calculating optimal output and market price

    The market demand for propylene is X =2200 -100P Where X and P denote the market output and price respectively. 1. Calculate the optimal output produced by each firm at the long run competitive equilibrium (LRCE). 2.

  • Determining Equilibrium Price Level Under Perfect Competition

    cost, it is long run equilibrium price.

  • Long Run costs and Output Decisions

    If no, explain why not (that is, what would happen in the long run to change the equilibrium and why?) No. In long run, more firms will enter into the market and each will make zero economic profits.

View More Related Solutions