Problems
10. Firms A, B, and C all produce roof shingles in a perfectly
competitive market. The diagrams below show marginal cost
curves for each of the three firms.a. Suppose each firm is producing 1000 bundles per day. Is
this industry productively efficient?
b. If the industry’s total output is to be maintained at 3000
bundles, how should the production be allocated among
the firms in order to minimize the total cost of
production?
c. If the market price of a bundle of roof shingles is $20,
how many bundles should each firm produce if it wants
to maximize its profits? Is this outcome also productively
efficient? Explain.