The market for apple pies in the city of Ectenia is competitive and has the following demand schedule:
Each producer in the market has a fixed cost of $9 and the following marginal cost:
|Marginal Cost ($)||2||4||6||8||10||12|
(a.) Complete the following table by computing the total cost and average total cost for each quantity produced.
|Quantity (Pies)||Total Cost ($)||Average Total Cost ($)|
(b.) The price of a pie is now $11. How many pies are sold in the market? How may pies does each producer make? How many producers are there in the market? What profit does each producer make? Is the market in long-run equilibrium?
(c.) Suppose that in the long run there is free entry and exit. In the long-run, how much profit does each producer earn? What is the market price? How many pies are sold in the market? How many pies does each producer make? How many producers are there operating?