A firm in a purely competitive industry is currently producing 1,200 units per day at a total cost of $500. If the firm produced 1,000 units per day, its total cost would be $350, and if it produced 700 units per day, its total cost would be $325. a. What are the firm's ATC at these three levels of production?
At 1,200 units per day, ATC = $0.45
At 1,000 units per day, ATC = $0.35
At 700 units per day, ATC = $0.46 b. If every firm in this industry has the same cost structure, is the industry in long-run competitive equilibrium?
c. From what you know about these firms’ cost structures, what is the highest possible price per unit that could exist as the market price in long-run equilibrium? $0.38
d. If that price ends up being the market price and if the normal rate of profit is 10 percent, then how big will each firm’s accounting profit per unit be?