ere are 80 firms of type A and 60 firms of type B in a perfectly competitive market. On one hand, type A firm faces a fixed cost (all sunk) of $12 and average variable cost is 2q. On the other hand type B firm faces a fixed cost (all sunk) of $8 and the variable cost is 3q. Market demand function is given by Q=1200-70P. Find the equilibrium quantity of a type B firm and its profit, respectively.

ere are 80 firms of type A and 60 firms of type B in a perfectly competitive market. On one hand, type A firm faces a fixed cost (all sunk) of $12 and average variable cost is 2q. On the other hand type B firm faces a fixed cost (all sunk) of $8 and the variable cost is 3q. Market demand function is given by Q=1200-70P. Find the equilibrium quantity of a type B firm and its profit, respectively.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Question 6 In the figure below, panel (a) depicts the linear marginal cost of a firm in a competitive market, and panel (b) depicts the linear market supply curve for a market with a fixed number of identical firms. Price Price (a) Firm (b) Market MC MC $2.00 $2.00 #t $1.00 $100 100 200 @aadip 01 Q2 Quantity If there are 300 identical firms in this market, what level of output will be supplied to the market when price is $1.00? O 300 O 6,000 30,000 O 60,000
Short-run supply and long-run equilibrium Consiber the competitive market for rhodium. Assume that no matter how many firms operate in the induatry, every firm is identical and faces the same marpinal cost (MC), averapt total cost (ATC), and average variable cost (AVC ) curves plotted in the following praph. The following graph plots the market demand curve for thodium. If there were 10 firms in this market, the short-run equilibrium price of rhodium would be per pound. At that price, firms in this industry would. Therefore, in the long run, firms would the rhodium market. Because you know that competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be per pound. From the graph, you can see that this means there will be firms operating in the rhodium industry in long-run equilibrium. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns positive accounting profit. True False
4.5 Show that the long-run equilibrium number of firms is indeterminate when all firms in the industryshare the same constant returns-to-scale technology and face the same factor prices.4.7 Technology for producing q gives rise to the cost function c(q) = aq + bg. The market demand forqisp =a - Bq.(a) If a>0, if b < 0, and if there are J firms in the industry, what is the short-run equilibriummarket price and the output of a representative firm?b) Ifa> 0 and b <0, what is the long-run equilibrium market price and number of firms? Explain.() Ifa>0and b > 0, what is the long-un equilibrium market price and number of firms? Explain.
2. A ski resort faces daily demand given by p = a - Q, where a varies from day to day. Over a three- day period, a takes on the values 80.100, and 120. The marginal cost is zero. The fixed cost for the three-day period is $2500. If the firm uses dynamic pricing, it changes its price every day to maximize profit. If it uses non-dynamic pricing, it sets the same price for all three days, assuming that a takes on its average value of 100 each day. Calculate the consumer surplus and the firm's profit over the three-day period under each pricing approach.
Below is the demand schedule for wholesale pallets of ice cream. Assume that the marginal cost of supplying a wholesale pallet of ice cream is a flat $40 per pallet. Price Quantity Total Revenue Total Cost Profit $100 40 $90 50 $80 60 $70 70 $60 80 $50 90 $40 100 First, complete the table above for TR, TC, and profit. If this were a competitive industry, where P=MC, what would be the price and quantity of wholesale ice cream? If ice cream were supplied instead by a profit-maximizing monopoly, what would be the price and quantity? If Ben and Jerry were to form a collusive duopoly for the production of ice cream, what would be the price and industry quantity? If Ben and Jerry split the market in d. evenly, what would be the output and profit for each of them? What if Ben were to cheat on the cartel and produce a higher output by 10 pallets: What is Ben’s resulting output…
Each of the 8 firms in a competitive market has a cost function of C=5+q°. The market demand function is Q = 360 – p. Determine the equilibrium price, quantity per firm, and market quantity. The equilibrium price is $. (Enter your response as a whole number.) DEC tv 13 MacBook Air DII 80 esc F5 F6 F7 FB F3 F4 F1 @ # $ % & 1 3 4 6 7 8. Q W E IT Y tab F caps lock C V ft fn つつエリ
12. a) Given a typical firm in a perfectly competitive market show the firm's optimal choice alongside the market equilibrium, and briefly explain why both consumer and producer surplus are maximised in this case. b) A profit-maximising firm faces a downward-sloping demand curve for its output and has marginal costs that inerease with output. Show, on a single diagram, how its profit maximisation decision can be represented both in terms of marginal revenue and marginal cost, and a feasible set optimisation. c) Explain and identify on a diagram the dead weight loss that arises in b) above and thereby compare the equilibrium in b) with the eqilibrium found in a) above in terms of Pareto efficiency. d) Assume an initial equilibrium in which the typical firm in a perfectly competitive industry is earning excess profits. Explain how this excess profit will be reduced to normal profit. You should illustrate your answer with a diagram.
Mondi Company produces party boxes that are sold in bundles of 1000 boxes. The market is highly competitive, with boxes currently selling for R100 per thousand. The company has a total and marginal cost curve given by: TC = 3,000,000 + 0.001Q2 MC = 0.002Q Q is measured in thousand box bundles per year. [5] a. Determine Mondi's profit maximizing quantity. b. Calculate if the firm is earning a profit or a loss? c. Based on the analysis above, should Mondi Company operate or shut down in the shortrun?
The following graph shows the marginal cost curve for Oiram-46, a competitive firm producing magic hats. Suppose that currently, the prevailing market price is $1.50 per magic hat. On the following graph, use the blue points (circle symbol) to plot Oiram-46's price line. Then use the grey points (star symbol) to indicate the profit maximizing quantity of output produced by Oiram-46. TOTAL COST (Dollars) he 12 11 10 a 8 N 3 2 1 0 + Oiram-46 7 0 MC + H 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 QUANTITY (Magic hats per week) Based on the graph, Oiram-46's profit-maximizing quantity is Demand Profit maximizing quantity ? magic hats, average revenue is $ and marginal revenue is
1. Below is the price and quantity information a firm. For example, at a price of $2.80, 60 units are sold. P1 = 3.20 Q1 = 40 P2 = 2.80 Q2 = 60 P1 = 2.20 Q1 = 90 P2 = 1.80 Q2 = 110 P₁ = 1.20 Q1 = 140 P2 = 0.80 Q2 = 160 a. Construct the demand curve for this firm with P on the vertical and Q on the horizontal axis. b. Using the equation for PED, calculate the price elasticity of demand. Use absolute value to determine and describe the range of elasticity. c. Using the results from "b" and the equation for TR, analyze the relationship between the ranges of elasticity and revenues. d. Using the graph from "a" and the analysis from "c," predict the price this firm will likely charge customers. Why?
Pricing Strategies for Firms with Market Power-End of Chapter Problem Elario's inverse demand for cupcakes is And Elario's marginal and average cost is a constant $0.50. Suppose Elario decides to sell cupcakes only in packages of 20. a. How much would customers be willing to pay to obtain a 20-pack of Elario's cupcakes? Price for 20-pack = $ b. How much profit will Elario earn from each customer? Profit per customer: $ c. Profit under this scheme is profit earned by Elario in part d of problem 16.
Assume that a purely competitive firm has the schedule of costs given in the table below. output TFC TVC TC 0 $500 $0 $500 1 500 150 650 2 500 200 700 3 500 260 760 4 500 340 840 5 500 450 950 6 500 590 1090 7 500 770 1270 8 500 1000 1500 9 500 1290 1790 10 500 1650 2150 Indicate what output the firm would produce and its profits in the following table and transform the information of price and quantity supplied into a supply curve in a diagram. Price Quantity supplied Profit (+) or loss (−) $ 50 150 250 _____ _____