Assume that the most efficient production technology available
for making vitamin pills has the cost structure given in the
following table. Note that output is measured as the number of
bottles of vitamins produced per day and that costs include a
normal profit. a. What is ATC for each level of output listed in
the table? b. Is this a decreasing-cost industry? (Answer yes or
no.) c. Suppose that the market price for a bottle of vitamins is
$2.50 and that at that price the total market quantity demanded is
75,000,000 bottles. How many firms will there be in this industry?
d. Suppose that, instead, the market quantity demanded at a price
of $2.50 is only 75,000. How many firms do you expect there to be
in this industry? e. Review your answers to parts b, c, and d. Does
the level of demand determine this industry’s market structure? Yes
or no
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