Table 93 Shows the Cost Structure for a Perfectly Competitive Firm

question 20

Essay

Table 9.3 shows the cost structure for a perfectly competitive firm of which there are a total of 50 in the industry $$\begin{array}{l}\text { Table } 9.3\\\begin{array} { c c c } \hline \mathrm { Q } & \mathrm { MC } & \text { ATC } \\\hline 200 & 17 & 26 \\300 & 19 & 25 \\400 & 21 & 24 \\500 & 23 & 23 \\600 & 25 & 24 \\700 & 27 & 26 \\800 & 29 & 29 \\\hline\end{array}\end{array}$$ and Table 9.4 shows the market demand and market supply schedules, $\text { Table } 9.4$
$\begin{array}{ccc}\mathrm{P} & \mathrm{Qd} & \mathrm{Qs} \\\hline 17 & 80000 & 10000 \\19 & 40000 & 15000 \\21 & 20000 & 20000 \\23 & 10000 & 25000 \\25 & 5000 & 30000 \\27 & 2500 & 35000 \\29 & 1250 & 40000\end{array}$
a) What is the equilibrium price? At this price what quantity will the firm produce?
b) Is the perfectly competitive firm earning an economic profit or loss in the short-run? How much?
c) In the long run, what is the economic profit of the competitive firm?
d) What will the equilibrium price and quantity traded in the long run?
e) What quantity will the firm produce in the long-run?
f) How many firms will exist in the long-run?
g) Is the representative perfectly competitive firm achieving efficiency?

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Definitions:

Subliminal Stimuli

Stimuli presented below the threshold of conscious awareness, which can nonetheless affect thoughts, feelings, or actions.

Unconscious Thought

Mental processes that occur without conscious awareness, influencing behaviors, perceptions, and attitudes.

Collective Unconscious

A concept introduced by Carl Jung, referring to the part of the unconscious mind which is derived from ancestral memory and experience and is common to all humankind.

Implicit Memories

Memories that influence thoughts and behaviors without conscious awareness, such as learned skills and conditioned responses.