Assume that a purely competitive firm is selling 2000 television sets
a day at a cost of $90,000. Assume that if the firm sells 1600 units
per day, its total cost would be $60,000, and if it sold 1000 units per
day, it would have a total cost of $55,000.
- Calculate the average total cost at these different sales levels.
- Assuming that the cost structure for every firm in the industry is
identical, do you think that the industry could be in long-run
- If the industry is perfectly competitive, what would be the long-run equilibrium market price?
- If your answer to c is the market price and every firm in the
industry is earning a normal profit of 15 percent, calculate what that
profit would be.