Suppose That Each Firm in an Industry Has Total Costs

question 54

Essay

Suppose that each firm in an industry has total costs as shown in the following table. $$\begin{array} { | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Output }\end{array} & \begin{array} { c } \text { Total Costs } \\\text { (dollars) }\end{array} \\\hline 1 & 100 \\\hline 2 & 102 \\\hline 3 & 105 \\\hline 4 & 110 \\\hline 5 & 118 \\\hline 6 & 128 \\\hline 7 & 140 \\\hline 8 & 155 \\\hline\end{array}$$ (A) Suppose that the quuantity demanted in the market is perfectly inelastic at a quiantity af 6. Calculate the average tatal cost for each firm when there are 1, 2, and 6 firms in the inciustry. Draw a diagran incicating the relationship between average tatal cost and the number of Eirms.
(B) Suppose the quentity demended in the market exgands because of an opening of trade and is now perfectly inelastic ata quantity of a. Draw a diagram sirilar to the ane in part $( A )$ , inflicating the relationship between average total cost and the number of firms Why does this apering of tade cause this shift in the curve?
(C) What happens to price in the long run? Eogulain.

---

Definitions:

Earned Income Credit

A repayable tax incentive aimed at individuals and families of low to moderate income who are employed, especially those with children.

EIC Formula

The calculation method used to determine the Earned Income Credit, a refundable tax credit for low to moderate-income working individuals and families.

Earned Income

Income derived from active participation in a business, including wages, salaries, tips, and net earnings from self-employment.

Elderly or Disabled

Elderly or Disabled refers to tax terms that qualify individuals for certain tax deductions or credits based on their age, typically over 65, or if they have a qualifying permanent disability.