Assume that the following cost data are for a purely competitive producer:
Answer the questions in the first column in the table below for each of the prices listed at the top of each of the three columns, (a), (b), and (c).
Instructions: Round your answers to 2 decimal places. Select “Not applicable” and enter “0” for output if the firm does not produce.
(a) At a product price of $56 (b) At a product price of $41 (c) At a product price of $32
Will this firm produce in the short run? (Click to select)NoYes (Click to select)YesNo (Click to select)NoYes
If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output?
(Click to select)Loss-minimizingProfit-maximizingNot applicable
output = units per firm
(Click to select)Not applicableProfit-maximizingLoss-minimizing
output = units per firm
(Click to select)Loss-minimizingProfit-maximizingNot applicable
output = units per firm
What economic profit or loss will the firm realize per unit of output?
(Click to select)Not applicableProfitLoss per unit = $
(Click to select)Not applicableLossProfit per unit = $
(Click to select)Total profitTotal loss = $
d. In the table below, complete the short-run supply schedule for the firm (columns 1 and 2) and indicate the profit or loss incurred at each output (column 3).
Instructions: Enter your answers as whole numbers. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. e. Now assume that there are 1,500 identical firms in this competitive industry; that is, there are 1,500 firms, each of which has the cost data shown in the table. Complete the industry supply schedule (column 4 in the table above).
f. Suppose the market demand data for the product are as follows:
What will be the equilibrium price? $.
What will be the equilibrium output for the industry? .
For each firm? units.
Instructions: Enter positive values for the reported profit or loss?
What will profit or loss be per unit? (Click to select)LossProfit per unit = $.
Per firm? $.
Will this industry expand or contract in the long run? (Click to select)ExpandContract.
