1. The following table gives quantity supplied and quantity demanded at various prices in the perfectly competitive meat-packing market: Price (per lb.) QS (in millions of lbs.) QD $1.00 10 100 $1.25 15 90 $1.50 25 75 $1.75 40 63 $2.00 55 55 $2.25 65 40 Assume that each firm in the meat-packing industry faces the following cost structure: Pounds TC 60,000 $110,000 61,000 $111,000 62,000 $112,000 63,000 $115,000 a. What is the profit-maximizing output level for the typical firm? (Hint: Calculate MC for each change in output, then find the equilibrium price, and calculate MR for each change in output.) (10 points) b. Is this market in long-run equilibrium? Why or why not? (Hint: Calculate ATC.) (10 points) What do you expect to happen to the number of meat-packing firms over the long run? Why? (10 points)
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