This preview shows page 1. Sign up to view the full content.
Unformatted text preview: t is MC = 12 + (Q/20). In the long run firms may enter the market freely. What is the longrun market supply curve?
A horizontal line at P = $13.87. Explanation:
Equate average cost (AC) to marginal cost (MC).
http://e z to.mhe c loud.mc gr a w- hill.c om/hm.tpx? todo= pr intvie wSingle 1/2 1/21/2014 Assignme nt Pr int Vie w AC = (35/Q) + 12 + (Q/40). MC = 12 + (Q/20). (35/Q) + 12 + (Q/40) = 12 + (Q/20).
Solve for Q. Q = 37.43.
Compute ACmin at Q = 37.43. ACmin = (35/37.43) + 12 + (37.43/40). ACmin = 13.87.
When there is free entry, longrun market supply is a horizontal line at: P = ACmin = 13.87. http://e z to.mhe c loud.mc gr a w- hill.c om/hm.tpx? todo= pr intvie wSingle 2/2...
View Full Document
This note was uploaded on 01/22/2014 for the course ECO 3352 taught by Professor Ax during the Fall '13 term at Troy.
- Fall '13