Illustrate what will be the long run market equilibrium, Ask an Expert

Economics

Q. Ten competitive sawmills currently supply lumber to a market whose demand q, depends on lumber price, p, as follows:
q = 3550 - 350p.
The cost function of each mill is identical:
Ci = 5qi + 0.05qi2 + 80; i = 1........10

(a) Conclude the market supply curve.

(b) Conclude the short run equilibrium market price also output.

(d) Technical development changes the cost function of new mills to: Cj = 5qj + 0.1qj2 + 22.5
Ninety new competitive mills enter the market. Illustrate what becomes the new short-run equilibrium market price also output? Assume the old mills still operate also which the entry also exit of mills do not affect individual mill cost functions.

(e) Illustrate what will be the long run market equilibrium price also output? Elucidate how many mills of Illustrate what type - new or old - will survive?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9165650

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