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(PDF) The Effects of Market Structure on Industry

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Added on  2021-04-17

(PDF) The Effects of Market Structure on Industry

   Added on 2021-04-17

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Running Head:IMPACT OF MARKET STRUCTURE ON PRICING AND OUTPUTDECISIONImpact of Market Structure on Pricing and Output DecisionName of the StudentName of the UniversityAuthor note
(PDF) The Effects of Market Structure on Industry_1
IMPACT OF MARKET STRUCTURE ON PRICING AND OUTPUT DECISION1Table of ContentsAnswer 1....................................................................................................................................2Answer 2....................................................................................................................................2Answer 3....................................................................................................................................4Answer 4....................................................................................................................................5Answer 5....................................................................................................................................6
(PDF) The Effects of Market Structure on Industry_2
IMPACT OF MARKET STRUCTURE ON PRICING AND OUTPUT DECISION2Answer 1a) The graph above shows that equilibrium price in the market is above the minimum point ofaverage variable cost but below the average total cost. This implies by operating in themarket, the firm though unable to recover its total cost entirely but the variable cost isrecovered. This can be used to pay some of its fixed costs. The firm is incurring loss in theshort run. Therefore, it is not a very good decision for this firm to be in the long run.However, the firm can continue its operation in the short run until price reached to theminimum point of Average variable cost, which is defined as the shut-down. b) There is a loss. c) In the long run, some existing firm will leave and the short run profit will disappear. Answer 2a)Breakevenpoint=TFCP−VC¿3000025−10¿3000015¿2000Therefore, the firm must sell 2000 speedometers to break even b)Break even revenueRevenue=Numberofspeedometerssold×unitprice
(PDF) The Effects of Market Structure on Industry_3

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