Question
Suppose that Keystone is a firm in perfectly competition ski resort business. If all Keystone’s input price unexpectedly double, and at the same time the product price doubles, what will happen to Keystone profit-maximizing level of output and its profit in the short run? In the long run? (Assume Keystone begin from a position of long run equilibrium.)
Answers
economyst
Do a little research, and then take a shot. What do you think?
Hint, how would the average cost curve change if all input prices changed by the same factor (e.g., doubled)?
What does the demand curve for a single firm in a perfectly competitive industry look like; and how would it look if the output price changed (e.g., doubled)
Hint, how would the average cost curve change if all input prices changed by the same factor (e.g., doubled)?
What does the demand curve for a single firm in a perfectly competitive industry look like; and how would it look if the output price changed (e.g., doubled)
jay bee
average cost will curve up