You are one of 5 identical firms (i. e., you all have the same costs) that sell widgets. each day you have a fixed cost of $9 to operate. the marginal cost of your first through fifth widgets are $1, $2, $3, $7, and $8, respectively. you have a capacity constraint of 5, and you can only produce a whole number of widgets.
a. what is the average variable cost (avc) for a firm that produces 2 widgets?
b. what is the market-level quantity supplied given a price of $2.50?
c. suppose the market-level demand is fixed at 18. in other words, there is perfectly inelastic demand. what is the equilibrium price in the short run?
d. given perfect competition, what will be the price in the long run?
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You are one of 5 identical firms (i. e., you all have the same costs) that sell widgets. each day yo...
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