Topic: (Perfect competition, adjustment to LR equilibrium) Question:. Suppose that P = MC = $16, AVC = $14 and ATC = $18 at the level of output chosen by all firms in a short-run equilibrium of a perfectly competitive industry.a) (15 marks) Explain what will happen to (i) output per firm (q), (ii) industry output (Q), (iii) industry price (P) and (iv) the number of firms (n) as the industry adjusts to the new long-run equilibrium. Use industry and firm diagrams to explain your answer.b) (5 marks) Determine whether or not it is possible to determine whether the new long-run equilibrium price will be (i) 16 or (ii) 18 or (iii) between 16 and 18 or (iv) greater than 18.
Equilibrium of a competitive industry
Get your custom paper done at low prices
275 words/page
Double spacing
Free formatting (APA, MLA, Chicago, Harvard and others)
12 point Arial/Times New Roman font
Free title page
Free bibliography & reference
TESTIMONIALS
What Students Are Saying
Outstanding, thank you very much.
Awesome. Will definitely use the service again.