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testOct19.C02.2009.aaa

# testOct19.C02.2009.aaa - 1 ECMC02H Intermediate...

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2 PART I - 15 Multiple Choice Questions - 75 marks 1-5. A firm in a perfectly competitive constant cost industry has total costs in the short run given by: TC = 2.5q 2 + 5q + 40 where q is output per day and TC is the total cost per day in dollars. The firm has fixed costs of \$30 (already included in the TC equation above). The TC equation generates minimum average costs of \$25 (per unit) at q = 4. You are also told that this size firm generates minimum long run average costs (that is, minimum LRAC occurs at q = 4, with min LRAC = \$25). In the short run, there are 200 firms in this industry. Questions 1 through 5 concern this firm and this industry. 1. In the short run there are 200 firms in the industry, all with the same cost curves described above. Suppose that the demand curve facing the industry is given by the equation P = 125 - .075Q where P is the price per unit and Q is the number of units demanded per day. The equilibrium price in the short run is: A) \$25 B) \$30 C) \$35 D) \$40 E) \$45 F) \$50 G) \$55 H) \$60 I) \$65 J) none of the above
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testOct19.C02.2009.aaa - 1 ECMC02H Intermediate...

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