Answer to Question #53843 in Economics of Enterprise for john cunningham
A firm in a purely competitive industry is currently producing 1,000 units per day at a total cost of $450. If the firm produced 800 units per day, its total cost would be $300, and if it produced 500 units per day, its total cost would be $275.
a What are the firm’s ATC per unit at each of these three levels of production?
b If every firm in this industry has the same cost structure, is the industry in long-run competitive equilibrium?
c From what you know about these firms cost structures, what is the highest possible price per unit that could exist as the market price in long-run equilibrium?
d If that price ends up being the market price and if the normal rate of profit is 10 percent, then what will each firm’s