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The market for tortillas is perfectly competitive, with market demand for packages of tortillas given by P=1 .-00002Q, with price in dollars per package and Q in thousands of packages. The short-run marginal cost curve for a typical tortilla factory is MC = .05 .00+05q, with MC in dollars per package and q in thousands of packages.The fixed cost of running a tortilla factory is $10,000 per firm.

(a) If there are 100 identical factories, determine the short-run industry supply function.

(b) What is the market equilibrium quantity of tortillas, and what is the equilibrium price?

(c) At this output level, what is the typical factory's producer's surplus?

(d) What is the typical factory's profit?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9690661

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