This preview shows page 1. Sign up to view the full content.
Unformatted text preview: 2) a) Draw a diagram showing Average Total Cost (ATC) and Marginal Cost (MC) for production of a good where each unit costs $10 to produce, and Fixed Cost = 0 that requires no fixed cost. b) What is average variable cost AVC? c) What is the total cost (TC) when Q = 50? 3) Consider the ATC graph below for a typical firm in a perfectly competitive industry. a) Do firms earn economic profit if the market price = $100 per unit? b) How can we tell? c) What would happen to the number of firms in this market if P = 100? d) Suppose all firms are identical. What is the long run competitive equilibrium price? ATC $/Q Q - output 100 50...
View Full Document
This note was uploaded on 03/11/2008 for the course EC 201 taught by Professor Brown during the Winter '07 term at Cal Poly Pomona.
- Winter '07