Homework answers / question archive / Suppose the total cost of a representative perfectly competitive apple producer is given as TC = 12 +64 + q2

Suppose the total cost of a representative perfectly competitive apple producer is given as TC = 12 +64 + q2

Economics

Share With

Suppose the total cost of a representative perfectly competitive apple producer is given as TC = 12 +64 + q2. All apple producers in the market are assumed to be identical. Suppose further that the demand for apples is estimated as Qd = 18,000 – 500P and market supply is Qs = 2,000+ 500P. a. (2 points) Find the equilibrium market price and total supply of apples in the market. b. (4 points) What is the profit maximizing quantity of apples each company would produce? Find the total revenue, total cost and profits associated with the profit maximizing quantity. C. (4 points) Comment on whether this is an equilibrium in the short-run or in the long-run. Which assumption of perfectly competitive markets do you base your response on? d. (3 points) What is the short-run supply function of this apple producer? e. (2 points) What is the number of companies in the market in the short run? f. (5 points) Using the assumptions of the perfectly competitive model, comment on what will happen in the market in the long run. What will be the new equilibrium price? What will be the number of companies? Assume input prices will remain the same, no matter what, regardless of the number of apple producers in the market.