Answer to Question #154673 in Economics of Enterprise for Muhammad Ammar Khan

Question

1.     The Hamilton Company is a member of a perfectly competitive industry. Like all members of the industry, its total cost function is                                              2 marks

where TC is the firm’s monthly total cost (in dollars) and Q is the firm’s monthly output.

a.      If the industry is in long-run equilibrium, what is the price of the Hamilton Company’s product?

b.     What is the firm’s monthly output?

2.     In 2012, the box industry was perfectly competitive. The lowest point on the long-run average cost curve of each of the identical box producers was $4, and this minimum point occurred at an output of 1,000 boxes per month. The market demand curve for boxes was                                                                                                        2 marks

where P was the price of a box (in dollars per box) and Q_D was the quantity of boxes demanded per month. The market supply curve for boxes was

Where Q_S was the quantity of boxes supplied per month.

a.      What was the equilibrium price of a box? Is this the long-run equilibrium price?

b.     How many firms are in this industry when it is in long-run equilibrium?

Answer 1

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