Economics 301 Homework Assignment 5 SH Lee Due October 27 1. Use the figure of a

Economics 301 Homework Assignment 5 SH Lee Due October 27 1. Use the figure of a typical firm in a perfectly competitive market. a. If P=$5 what is the profit in the short-run? b. If P=$3 what is the profit in the short-run? c. If P=$3 what is the profit in the long-run assuming that there is no AVC curve in the figure? $ ATC MC 6 AVC 5 4 3 9 10 output 2. All competitive firms in the paper company have the same long run average total cost curve given by LRAC = (500000/Q) + 0.5Q + 5: a. What is the long run output level of a typical firm? (MC=Q+5) b.
Economics 301 Homework Assignment 5 SH Lee Due October 27 1. Use the figure of a typical firm in a perfectly competitive market. a. If P=$5 what is the profit in the short-run? b. If P=$3 what is the profit in the short-run? c. If P=$3 what is the profit in the long-run assuming that there is no AVC curve in the figure? $ ATC MC 6 AVC 5 4 3 9 10 output 2. All competitive firms in the paper company have the same long run average total cost curve given by LRAC = (500000/Q) + 0.5Q + 5: a. What is the long run output level of a typical firm? (MC=Q+5) b. What is the long-run equilibrium price? 3. Assume the market for tortillas is perfectly competitive. The market supply and demand curves for tortillas are given as: Supply curve: P = .000002Q Demand curve: P = 11 -.00002Q The short run marginal cost curve for a typical tortilla factory is: MC = .1 + .0009q a. Determine market equilibrium price and quantity. b. Determine the profit maximizing short run equilibrium level of output for a tortilla factory. c. Assuming that all of the tortilla factories are identical how many tortilla factories are producing tortillas?
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