Long-Run Equilibrium Analysis in the Binder Industry

a) What is the short-run equilibrium price and output of binders?

b) What is the long-run, profit-maximizing level of output of the representative binder seller?

c) What is the long-run equilibrium price charged in the market for binders?

d) What is the long-run equilibrium output of the binder industry?

e) How many binder sellers will there be in the long-run equilibrium?

a) Short-Run Equilibrium Price and Output

b) Long-Run, Profit-Maximizing Level of Output

c) Long-Run Equilibrium Price

d) Long-Run Equilibrium Output

e) Number of Binder Sellers in Long-Run Equilibrium

For the short-run equilibrium price and output of binders, the price is $16.80 and the output is 2620 binders per month.

In the long run, the profit-maximizing level of output for the representative binder seller is 4 binders per month. This is achieved by producing where average total cost (ATC) is at a minimum.

The long-run equilibrium price charged in the market for binders is $16.80, which corresponds to the minimum ATC of firms in the industry.

The long-run equilibrium output of the binder industry is 4,460 binders per month, where firms meet the demand at the long-run price.

Approximately 1,115 binder sellers will be present in the long-run equilibrium, calculated by dividing the total quantity of output by the output per firm.