Homework203_6AK(f09)

Homework203_6AK(f09) - Homework#6 Answer Key 1 Assume a...

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Homework #6 Answer Key 1. Assume a competitive market that generates a price such that the typical firm in this market is making a profit. Draw two diagrams side-by-side, one representing the typical firm and the other representing the market. On your diagrams, label all of the following: the price set in the market, the quantity the typical firm will produce (Q F ), the marginal revenue (MR) and average revenue (AR) of the typical firm, and the demand facing the typical firm (D F ). Be sure to shade the profit made by the typical firm. Show what adjustments will occur in this market overtime and how these adjustments will affect the typical firm. 2. Suppose the pizza market in the S.U. area is competitive. Assume the market has reached a long-run competitive equilibrium. a. Draw the current equilibrium using graphs to show the pizza market and the individual pizzeria. AC P MC Q Q P S Q 1 AR’= MR’=D f P 2 =AC 2 Q 2 AR=MR=D f P 1 AC 1 D Firm Market S’
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Homework203_6AK(f09) - Homework#6 Answer Key 1 Assume a...

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