Economics doubt P3 and P4, post it all in here!

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c4HebD2.png

How is the answer C? Why not D?
O/N/2005
 
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unique111

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David Hussey said:
the book says
For the firm the long run equilibrium is where MC=ATC=AR=MR
so that means in this questions, the firm is in disequilibrium, so shouldnt it b A or B
idk about industry
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For the firm, you produce where MC=MR, so it is in equilibrium. However, i don't get about the industry too. The er writes in a language i fail to decipher. :/
 
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unique111 said:
For the firm, you produce where MC=MR, so it is in equilibrium. However, i don't get about the industry too. The er writes in a language i fail to decipher. :/
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same.
David Hussey said:
the book says
For the firm the long run equilibrium is where MC=ATC=AR=MR
so that means in this questions, the firm is in disequilibrium, so shouldnt it b A or B
idk about industry
Click to expand...
My point was, since PC market is a price taker - the price in this diagram should always be the markets equilibrium price. Right?
 
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c4HebD2.png

How is the answer C? Why not D?
O/N/2005
Click to expand...
logic is this that industry gives price or MR or AR to the firm..they get it via normal demand supply interaction...here production is based upon MC=MR meaning firm is maximising profit upto the last limit so its in equilbrium but industry not...
heres how
normal demand is AR for industry and suplly is AC not MC because in average total cost is also present and industry being a collection of firm have to consider this so here AC is above MR meaning they arent meeting so industry is in disquilibrium :)
 
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Bachelor said:
logic is this that industry gives price or MR or AR to the firm..they get it via normal demand supply interaction...here production is based upon MC=MR meaning firm is maximising profit upto the last limit so its in equilbrium but industry not...
heres how
normal demand is MR for industry and suplly is AC not MC because in average total cost is also present and industry being a collection of firm have to consider this so here AC is above MR meaning they arent meeting so industry is in disquilibrium :)
Click to expand...
i think i get it.
 
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Bachelor and idea on the other one?
Bachelor said:
logic is this that industry gives price or MR or AR to the firm..they get it via normal demand supply interaction...here production is based upon MC=MR meaning firm is maximising profit upto the last limit so its in equilbrium but industry not...
heres how
normal demand is MR for industry and suplly is AC not MC because in average total cost is also present and industry being a collection of firm have to consider this so here AC is above MR meaning they arent meeting so industry is in disquilibrium :)
Click to expand...
 
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Bachelor said:
logic is this that industry gives price or MR or AR to the firm..they get it via normal demand supply interaction...here production is based upon MC=MR meaning firm is maximising profit upto the last limit so its in equilbrium but industry not...
heres how
normal demand is AR for industry and suplly is AC not MC because in average total cost is also present and industry being a collection of firm have to consider this so here AC is above MR meaning they arent meeting so industry is in disquilibrium :)
Click to expand...
ok so basically
for the firm to be in equilibrium , MR should be equal to MC
and for the whole industry, AR=AC
right?
 
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