53 00 s2 50 52 00 ATC 50 00 0 10 20 30 4b 50 60...

Question

Question

53 00 s2 50 52 00 ATC 50 00 0 10 20 30 4b 50 60 7 80 90 100 110 120 Bottles of shampoo (millions) Instructions: Round price v

business economics

Answer 1

Answer #1

a) Equilibrium quantity is where MR = MC i.e. 30 millions

Equilibrium price is the price where intersection of MR and MC meets the demand curve. Equilibrium price is $ 2.

b) Efficient quantity is where Demand = MC i.e. 45 millions

Efficient price is $ 1.50.

c)

53 00 MC s2 50 DWL ATC 51.50 51.00 MR so 00 0 10 20 30 40 50 60 7O 80 90 100 110 120 o* Bottles of shampoo (millions)

DWL = 1/2 x base x height = 1/2 x (2 - 1) x (45 - 30) = 1/2 x 15 = $ 7.5

Answer 2

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