Assume the Market for Tortillas Is Perfectly Competitive

question 49

Essay

Assume the market for tortillas is perfectly competitive. The market supply and demand curves for tortillas are given as follows:
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 the equilibrium price for tortillas.
b. Determine the profit maximizing short run equilibrium level of output for a tortilla factory.
c. At the level of output determined above, is the factory making a profit, breaking-even, or making a loss? Explain your answer.
d. Assuming that all of the tortilla factories are identical, how many tortilla factories are producing tortillas?

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Definitions:

Frame Breaks

can refer to interruptions or disconnections in the structural continuity of a building, vehicle, or other objects, often requiring repair or restructuring.

Express Warranty

An explicit promise made by a seller to a buyer regarding the condition, quality, or performance of the goods being sold.

Implied Warranty

A legal presumption that a product will perform as expected, despite no express statement of such quality assurance being made.

Sales Contract

A legal agreement between two parties, where one agrees to buy and the other agrees to sell goods or services under specified terms and conditions.