Suppose that each firm in an industry has total costs as shown in the following table. $$\begin{array} { | c | c | }
\hline \begin{array} { c }
\text { Quantity of } \
\text { Output }
\end{array} & \begin{array} { c }
\text { Total Costs } \
\text { (dollars) }
\end{array} \
\hline 1 & 100 \
\hline 2 & 102 \
\hline 3 & 105 \
\hline 4 & 110 \
\hline 5 & 118 \
\hline 6 & 128 \
\hline 7 & 140 \
\hline 8 & 155 \
\hline
\end{array}$$ (A) Suppose that the quuantity demanted in the market is perfectly inelastic at a quiantity af 6. Calculate the average tatal cost for each firm when there are 1, 2, and 6 firms in the inciustry. Draw a diagran incicating the relationship between average tatal cost and the number of Eirms.
(B) Suppose the quentity demended in the market exgands because of an opening of trade and is now perfectly inelastic ata quantity of a. Draw a diagram sirilar to the ane in part $( A )$, inflicating the relationship between average total cost and the number of firms Why does this apering of tade cause this shift in the curve?
(C) What happens to price in the long run? Eogulain.

Question

Suppose that each firm in an industry has total costs as shown in the following table. $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Quantity of } \
\text { Output }
\end{array} & \begin{array} { c } 
\text { Total Costs } \
\text { (dollars) }
\end{array} \
\hline 1 & 100 \
\hline 2 & 102 \
\hline 3 & 105 \
\hline 4 & 110 \
\hline 5 & 118 \
\hline 6 & 128 \
\hline 7 & 140 \
\hline 8 & 155 \
\hline
\end{array}$$ (A) Suppose that the quuantity demanted in the market is perfectly inelastic at a quiantity af 6. Calculate the average tatal cost for each firm when there are 1, 2, and 6 firms in the inciustry. Draw a diagran incicating the relationship between average tatal cost and the number of Eirms.
(B) Suppose the quentity demended in the market exgands because of an opening of trade and is now perfectly inelastic ata quantity of a. Draw a diagram sirilar to the ane in part $( A )$, inflicating the relationship between average total cost and the number of firms Why does this apering of tade cause this shift in the curve?
(C) What happens to price in the long run? Eogulain.

Quizplus · Accepted Answer

The Answer of Suppose that each firm in an industry has total costs as shown in the following table. $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Quantity of } \
\text { Output }
\end{array} & \begin{array} { c } 
\text { Total Costs } \
\text { (dollars) }
\end{array} \
\hline 1 & 100 \
\hline 2 & 102 \
\hline 3 & 105 \
\hline 4 & 110 \
\hline 5 & 118 \
\hline 6 & 128 \
\hline 7 & 140 \
\hline 8 & 155 \
\hline
\end{array}$$ (A) Suppose that the quuantity demanted in the market is perfectly inelastic at a quiantity af 6. Calculate the average tatal cost for each firm when there are 1, 2, and 6 firms in the inciustry. Draw a diagran incicating the relationship between average tatal cost and the number of Eirms.
(B) Suppose the quentity demended in the market exgands because of an opening of trade and is now perfectly inelastic ata quantity of a. Draw a diagram sirilar to the ane in part $( A )$, inflicating the relationship between average total cost and the number of firms Why does this apering of tade cause this shift in the curve?
(C) What happens to price in the long run? Eogulain.

Suppose That Each Firm in an Industry Has Total Costs