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The office-cleaning market is perfectly competitive. Consider a typical off-cleaning firm that currently faces $24 in fixed costs and an $8 hourly wage for workers. The price the firm gets for each office cleaned is $56 at the present market price. The production function of the firm is show: number of offices cleaned / hours of work 0 / 0 1 / 5 2 / 9 3 / 15 4 / 22 5 / 30

a. Compute the marginal cost & average total cost for each output level for the typical firm.

b. How many offices are cleaned by the typical firm at the present market price? What are the firm's profits at this price?

c. Is the industry in long-run equilibrium? explain.

d. What is the long-run equilibrium price level? How many offices are cleaned by the typical firm in long-run equilibrium?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9686545

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