In long-run equilibrium, Alpacky operates where ATC is minimized and equal to MC, which occurs at an output of 4 units with ATC and MC at $21.50, suggesting this to be the market price.
To find the market price at which Alpacky, an alpaca wool-manufacturing firm, operates in long-run equilibrium, we must look at the provided cost data. In long-run equilibrium, firms produce at the point where Average Total Costs (ATC) are minimized and equal to the marginal costs (MC) and the market price. By examining the table provided, the point where ATC and MC are equal is at an output of 4 units with both ATC and MC being $21.50. This is likely to be the closest to the market price since long-run equilibrium indicates that price equals ATC, which allows firms to earn normal profits without any economic profit.
The complete question is here:
The monthly average variable costs, average total costs, and marginal costs for Alpacky, a typical alpaca wool-manufacturing firm in Peru, are shown in the table below. All firms in the industry share the same costs as Alpacky, and the industry is in long-run equilibrium.
Instructions: Round your answer to the nearest cent.
The market price is $.
I tried to post this before but somebody said that the table is not clear. This is exactly how it is formatted.
In long-run equilibrium, Alpacky operates where ATC is minimized and - 1