QUESTION 3 The industry for cobalt mining is perfectly competitive. A typical mine has a capacity constraint of 200 tons (i.e., it cannot produce more than 200 tons) and a constant marginal cost of 400. All of the fixed cost is sunk. Currently there are 60 identical mines in the industry. The current market demand for cobalt is D (p) = 20,000 - 10p. (a) Find the supply curve of a representative mine. Draw the supply curve using Excel. (b) Find the short-run equilibrium price and quantity of cobalt.
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University Economics, Theory of Production
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- A firm in a perfectly competitive industry has patented a newprocess for making widgets. The new process lowers the firm’saverage cost, meaning that this firm alone (although still aprice taker) can earn real economic profits in the long run. a. If the market price is $20 per widget and the firm’s marginalcost is given by MC=0.4q , where q is the dailywidget production for the firm, how many widgets willthe firm produce? b. Suppose a government study has found that the firm’snew process is polluting the air and estimates the socialmarginal cost of widget production by this firm to be. If the market price is still $20, what is thesocially optimal level of production for the firm? Whatshould be the rate of a government-imposed excise tax tobring about this optimal level of production? c. Graph your results.Question list Question 8 O Question 9 O Question 10 K Sophia grows Christmas trees. Her cost of production is shown in the table below. Christmas Trees Total Cost $40 $60 $108 II $164 $228 6 $300 7 $380 Suppose the market for Christmas trees is perfectly competitive and that the market price for Christmas trees is $60 per tree. How many Christmas trees should Sophia grow? Sophia should grow trees. (Enter your response as an integer value.)The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Buddies Production Costs Quantity MC АТС of Ear Buds ($) ($) 9.00 - 10 2.00 5.50 15 2.44 4.48 20 3.56 4.25 25 4.50 4.30 30 5.02 4.42 35 5.96 4.64 40 8.56 5.13 Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? pairs b. At the profit-maximizing quantity, what is the total cost of producing ear buds? c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies profit or loss be per week? 2$ d. Now assume the market price is $5.50 per pair, and Buddies produces the…
- The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Buddies Production Costs Quantity MC ATC of Ear Buds ($) ($) 25 2.20 30 2.02 2.17 35 2.45 2.21 40 3.57 2.38 45 4.00 2.56 50 5.46 2.85 55 5.93 3.13 60 8.53 3.58 Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? pairs b. At the profit-maximizing quantity, what is the total cost of producing ear buds?A5 5. Suppose the market is perfectly competitive. The equilibrium market price P = $20. A consumer's willingness to pay (WTP) is WTP = 30 - q. (a) How much this consumer will buy and wh (b) How much a typical firm will produce the firm's marginal cost MC = 2q. If the average total cost is ATC = q, can you tell if this firm is making positive, negative, or zero economic profit (c) It is assumed here that all firms are identical. In what sense are they identica (d) Suppose now that one firm's marginal cost is: MC = 25/q. Can this industry still remain perfectly competitive? Why not?l?s?y?The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Buddies Production Costs Quantity MC ATC of Ear Buds ($) ($) 20 1.00 25 2.00 1.20 30 2.46 1.41 35 3.51 1.71 40 4.11 2.01 45 5.43 2.39 50 5.99 2.75 55 8.47 3.27
- The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a perfectly competitive firm that produces novelty ear buds in a competitive market. The market price of ear buds is $6.00 per pair. Buddies Production Costs Quantity MC ATC of Ear Buds ($) ($) 10 3.5 15 3 20 2.44 2.86 25 3.56 3 30 4.02 3.17 35 5.48 3.5 40 5.98 3.81 45 8.49 4.33 Instructions: In part a, enter your answer as the closest given whole imber. a. If Buddies wants to maximize its profits, how many pairs of ear buds should it produce? pairs Instructions: In parts b-d, round your answers to 2 decimal places. b. At the profit-maximizing quantity, what is the total cost of producing ear buds? $ c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what is Buddies weekly profit? 2$Suppose that the market for chicken momos is perfectly competitive with ten firms producing momos. Tasty treat is one of the ten price-takers in the market for momos. The accompanying tables show the demand schedule for momos in Dhaka and cost schedule for "Tasty Treat". DEMAND SCHEDULE Price (BDT per plate) Quantity demanded (plate per hour) 10 900 25 675 30 600 40 450 50 300 70 0 COST SCHEDULE OF TASTY TREAT Output (plate per hour) Marginal Cost (BDT per extra plate) Average Variable Cost (BDT per plate) Average total cost (BDT per plate) 40 20 25 90 50 10 10 75 60 30 20 55 70 50 23 50 80 70 35 60 90 85 50 77 a) What is the value of the shut-down price and break-even price for Tasty Treat?How did you figure that out?b) Write down the individual supply schedule of chicken momos for Tasty Treat and the industry supply schedule for chicken momos.c) Plot the market demand and supply curves for chicken momos and find the equilibrium price and…The production manager of a clothing manufacturer estimates that the daily total cost of producing men's suits is given by the equation: TC = 2,000+ 396Q + 0.8Q² The market price of suits is $300. Should the firm shut down? Select one: O No O Yes
- Suppose that each firm in a competitive industry has thefollowing costs: Total cost: TC=50 + 1/2q^2 Marginal cost: MC=q where q is an individual firm’s quantity produced. The marketdemand curve for this product is Demand: QD = 120 – P where P is the price and Q is the total quantity of the good.Currently, there are 9 firms in the market. a. What is each firm’s fixed cost? What is its variable cost?Give the equation for average total cost. b. Graph average total cost curve and the marginal cost curvefor q from 5 to 15. At what quantity is average total cost curve atits minimum? What us marginal cost and average total cost at thisquantity? c. Give the equation each firm’s supply curve. d. Give the equation for the market supply curve for the shortrun in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market inthe short run? f. In this equilibrium, how much does each firm produce?Calculate each firm’s profit or loss. Is there incentive for…The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Buddies Production Costs MC ($) Quantity of Ear Buds 5 10 15 20 25 30 35 40 2.00 2.45 3.55 4.00 5.50 5.98 8.52 pairs ATC ($) 2.00 2.00 2.15 2.50 2.80 3.25 3.64 4.25 Check my work Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? b. At the profit-maximizing quantity, what is the total cost of producing ear buds? c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies profit or loss be per week? d. Now assume the market price is $5.50 per pair, and Buddies produces the…13. Firms in Competitive Markets The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. Which of the following statements is true about the price of fertilizer? Check all that apply. The price of fertilizer must be greater than marginal cost. The price of fertilizer must be greater than average total cost. The price of fertilizer must be greater than average variable cost. The following graphs show the cost curves faced by a typical firm, the demand for fertilizer, and possible price and supply curves. Price and Costs LC+ MC ATC Firm LAVC I ? Price P₁₂ Demand Market I I S₁ 52 (?)