The ATC for each level of output listes in the table is computed as under. Yes, It is a decreasing Cost Industry. There will be around 1.53 firms in the industry.
Average total cost is the sum of all production costs divided by the quantity of units produced. Add up all fixed and variable costs, then divide by the quantity of units produced to determine average total cost.
In the given questions,
a. We know that,
Average Total Cost = Total Cost/Quantity
Therefore, the solutions for the same are computed in the form of a table and attached in the form of an image.
b. Here, also a table is attached in the form of an image and the calculations are computed for additional two items. So from the given table, we can conclude that, The cost of production increases with each 25,000 bottles, increase in the production above 100,000 bottles per day. The total cost is increasing by $5,000 but the average cost is decreasing. Therefore, the industry is a decreasing-cost industry.
c. The marked price is $2.13 at the price total quantity demanded by consumers is 75,000 bottles. At market price, $2.13, no firm will demand less than 75,000 quantity. There will be 1.53 firms in the industry.
d. The market quantity demanded at a price $2.13 is only 75,000. They expect only 1.5 firms in the industry.
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