Use the table below to answer the following question.
Table 12.2.4

-Refer to Table 12.2.4.The market is perfectly competitive and there are 1,000 firms that produce paper.
The top table sets out the market demand schedule for paper.
Each producer of paper has the costs shown in the bottom table when it uses its least-cost plant size.
The market price is ________ a box,the market output is ________ boxes,and the output produced by each firm is ________ boxes.Each firm ________.

Question

Use the table below to answer the following question.
Table 12.2.4

-Refer to Table 12.2.4.The market is perfectly competitive and there are 1,000 firms that produce paper.
The top table sets out the market demand schedule for paper.
Each producer of paper has the costs shown in the bottom table when it uses its least-cost plant size.
The market price is ________ a box,the market output is ________ boxes,and the output produced by each firm is ________ boxes.Each firm ________.

Quizplus · Accepted Answer

To determine the market price, we need to look at the quantity demanded when the total quantity supplied equals 1,000 times the quantity supplied by each firm. From the demand schedule, we see that at a quantity of 350,000 boxes (250 boxes per firm x 1,000 firms), the market price is $8.40 per box.
The market output is 350,000 boxes, which we just calculated.
Since we know each firm produces at least cost, each firm will produce 350 boxes (the least-cost plant size). Therefore, total output is 350 boxes x 1,000 firms = 350,000 boxes.
To determine economic profit or loss, we need to compare revenues to costs. At a price of $8.40 per box, each firm will have revenue of $2,940 (350 boxes x $8.40). From the table of costs, we see that the average total cost of production at 350 boxes is $9.021 per box. Therefore, the economic loss per box is $0.621. Multiplying this by the quantity produced (350 boxes), we get a total economic loss per week of $217.35 per firm, or $217,350 for all 1,000 firms.

Use the Table Below to Answer the Following Question