If a Representative Firm with Long-Run Total Cost Given by TC

question 32

Multiple Choice

If a representative firm with long-run total cost given by TC = 50 + 2q + 2q² operates in a competitive industry where the market demand is given by Q_D = 1,410 - 40P,the long-run equilibrium output of the industry will be:

• A) 490 units.
• B) 530 units.
• C) 570 units.
• D) 610 units.
• E) 650 units.

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Definitions:

Cost-output Elasticity

The ratio of the percentage change in cost relative to the percentage change in output, indicating how costs change with output levels.

Marginal Cost

The cost associated with producing one additional unit of a product.

Technological Change

Development of new technologies allowing factors of production to be used more effectively.

Isoquant

A curve representing all the combinations of inputs that yield the same level of output.