The Single Firm's
Decision about Output and Price
Mansfield, page 71, problem 7, a, b, d, e: (20 pts)
While the basic answer is given in the text,
my additions below get you to work through most of the main ideas of this
chapter. If you can do all of the parts of the problem, you have should have a
good grasp of how competitive markets operate.
a.
Draw a graph showing
Marginal Cost and Total Avg Cost. Use this graph to show output at the prices
indicated
b.
Show your calculations
c.
In one or two
sentences, explain why this will be the equilibrium price.
d.
ie, each firm’s output.
Show your calculations.
Nellis, page 69, # 4 (5 pts)