Micro Tut 8 Class Problems - Business Microeconomics...

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Business Microeconomics, Tutorials 8-9 CFO: POM, 9 th edition Chapters 12 MP: M, 9 th ed. Chapter 12 Tutorial 8 Perfect Competition Class Problems and Applications: 1. The market is perfectly competitive and there are 1,000 firms that produce paper. The first table sets out the market demand schedule for paper. Each producer of paper has the costs in the second table when it uses its least-cost plant. a. What is the market price of paper? b. What is the market’s output? c. What is the output produced by each firm? d. What is the economic profit made or economic loss incurred by each firm? e. Do firms have an incentive to enter or exit the market in the long run? f. What is the number of firms in the long run? g. What is the market price in the long run? h. What is the equilibrium quantity of paper produced in the long run? 2. Quick Copy is one of the many copy shops near the campus. Figure 12.5 shows Quick Copy’s cost curves. If the market price of copying a page is 10 cents, calculate Quick Copy’s a. Marginal revenue.
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