Suppose the market demand for milk is Qd = 150 - 5P. Additionally, suppose that a dairy's variable costs are VC = 2Q2 (where Q is the number of gallons of milk produced each day), its marginal cost is MC = 4Q and there is an avoidable fixed cost of $50 per day. In the long run there is free entry into the market. Suppose the demand for milk doubles. If in the short run the number of firms is fixed and their fixed costs are sunk, how much does each of the active firms produce in the short run equilibrium?
A. 5 units
B. 6 units
C. 10 units
D. 20 units
B. 6 units
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In 2008, the financial and housing crisis caused firms to decrease their profit expectations. As a result, there was a ________ in the ________ for loanable funds curve
A) leftward shift; demand B) movement upward along; demand C) leftward shift; supply D) movement downward along; supply
The long-run social benefits of infant industry protection are more likely to be realized if
(a) investors believe that tariff barriers are permanent. (b) investors believe that tariff barriers are transitory. (c) tariff barriers increase over time. (d) tariff barriers are replaced with quotas over time.
In the ISLM framework, a declining price level causes
A) interest rates to rise. B) income to fall. C) saving to rise. D) the LM curve to shift to the right.
The false belief that past outcomes affect future events is known as ______.
a. the endowment effect b. the gambler’s fallacy c. the law of diminishing marginal utility d. the ultimatum game