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In the Lemonade Stand Industry, Lucy Is Representative of a Low-Cost

question 53

Essay

In the lemonade stand industry, Lucy is representative of a low-cost provider and Charlie is representative of a high-cost provider. The minimum average total cost of the high-cost producers is $5. The low-cost producers have a long-run total cost curve given by LTC = 5Q -1.5Q2 + 0.33Q3, where LMC = 5 - 3Q + Q2. How much economic rent does the low-cost producer, such as Lucy, earn?


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