The Long-Run Cost Function Faced by Each Producer in a Perfectly

question 79

Essay

The long-run cost function faced by each producer in a perfectly competitive industry is given by: MC(Q)= 20 - 6Q + Q².The corresponding long-run average cost function is AC(Q)= 20 - 3Q + Q²/3.The market demand curve for the product is D(P)= 1100 - 50P.
A)What is the long-run equilibrium price in this industry? At this price,how much would an individual firm produce?

• A)What is the long-run equilibrium price in this industry? At this price,how much would an individual firm produce?

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Definitions:

Substitution Effect

The substitution effect describes the change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute one good for another.

Higher Wage

The increased remuneration or salary received by an employee, often as a result of promotions, market adjustments, or successful salary negotiations.

Labor for Leisure

The trade-off between working hours for income and spending time on relaxation or enjoyment activities.

Hourly Wage Rate

The hourly wage rate is the amount of money paid to an employee for one hour of work, often used to calculate overall earnings in jobs that compensate workers on an hourly basis.