Long-run Market Prjections effect on Output: Over time, will the total market increase, decrease, or remain...
Long-run Market Prjections effect on Output:
Over time, will the total market increase, decrease, or remain unchanged? Briefly explain.
The short term profit maximization
Qd = 8,000 - 0.8P
MR = 10,000 -2.5Q
FC = $4 million
MC =$2,000 per engine
MR= MC at a quantity of $3,200 engines per yr.
Engines sell for only $6,000
The economic profit for this year is $8,800,000.
This question is based on what would happen in the long-run, since the short term goals were already obtained.
Homework Answers
Since the firm has already achieved its short-term goals, the market for the firm increases in the long-run.
In the long-run the firm operates at the minimum point of its average cost curve by expanding its scale of production at medium size plant, producing the optimum output.
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