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The market demand and supply curves for the plywood industry, which is perfectly competitive, are given below:

QS = 20,000 + 30P

QD = 40,000 – 20P

The marginal cost curve for one firm in this industry, High Country Plywood, is given below

MC = 200 + 4Q

(a) In the short-run, how much economic profit will the firm earn? Please show your calculations.

(b) At what output will average costs be at a minimum? Please show your calculations.

(c) If the cost curves for all other firms in the industry are the same as for High Country Plywood, determine the long-run equilibrium price. Please show your calculations.

The total cost function was not provided.

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019

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Related questions

If a representative firm with the long-run total cost given by TC = 50+2q+2q^2 operates in a competitive industry where the short-run market demand and supply curves are given by Qd = 1,410 - 40P and Qs = -390 +20P, its long-run profit-maximizing level of output is:

Suppose you are given the following information about a particular perfectly competitive industry:

QD= 6500-100P .....Market demand

QS= 1200P .....Market Supply

C(Q)=722+(Q2)/200 ......Firm's total cost function

Assume all firms in this perfectly competitive industry are identical.

a) Find the equillibrium price and the equilibrium quantity for the entire industry, the output supplied by the firm, and the profit of each firm.

b) Would you expect to see entry into or exit from this industry in the long run? Explain. What effect will entry or exit have on market equilibrium?

c) Suppose the long run total cost function is given by C(Q) = 6Q-3Q2+Q3. What will the price be in long run equilibrium in this industry? Is profit positive, negative or zero? Explain.

Firm z, operating in a perfectly competitive market, can sell as much or as little as it wants of a good at a price of $16 per unit. Its cost function is C = 50 + 4Q +2Q^2. The associated marginal cost is MC = 4 +4Q, and the point of a minimum average cost is Qmin = 5.

a. Determine the firm's profit-maximizing level of output. Compute its profit.

b. The industry demand curve is Q = 200 -5P. What is the total market demand at the current $16 price? If all firms in the industry have cost structures identical to that of firm Z, how many firms will supply the market?

c. The outcomes in parts a and b cannot persist in the long run. Explain why. Find the market's price, total output, number of firms, and output per firm in the long run.

d. Comparing the short-run and long-run results explain the changes in the price and in the number of firms.

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