Consider the following perfectly competitive market, with an accompanying graph representing a firm within that market. Assume all the firms in the market follow this same cost arrangement. Which of the supply curves would result in firms entering the market? Entire Market Representative Firm 322 30 $1 30 S2 MC 25 25 ATC 20 15 10 S3 Price ($/gallon) AVC 20 15 10 5 5 OS1 D 2 4 6 8 10 12 ○ $2 ○ $3 2 3 4 5 6
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- 16:04 Fri 7 May 16% O a Ims.gimpa.edu.gh Suppose that the demand functions facing a multi- product firm are as follows: Q, = 40 – 2P, + P2 Q, = 15 + P, - P2 1 The cost function of the firm is given by C = Q², + Q,Q, + Q²2 %D How much should the firm produce for each product, in order to maximize profits? How much profit is obtained? MAGEMENT ANDY6 Suppose that a market consists of 300 identical firms, all with the same cost curve: TC(4) = 0.1 + 150g?. The market demand is given by Qd(p) = 60 - p (a) What is the equilibrium price and quantity? (b) What quantity must each firm produce and sell at equilibrium? (c) Do firms make positive profits in the market equilibrium? (d) Calculate consumers' surplus, producers' surplus and total surplus.Suppose that the market for bell peppers has just a single firm. That firm's marginal cost schedule is: Q MC ONTS Furthermore, assume that the market demand is given by PL9ZS3 11 19 What is the efficient (i.e. the competitive equilibrium) amount of output? 3 5 7 9 11 Quantity demanded 1 2 3 4 5
- Cynthia, the top student in her economics class, has realized that there is a business opportunity in tutoring her fellow students before each economics exam. Assuming her knowledge of economics eliminates any risk of competition and that her marginal cost is constant for the relevant output range, specify Cynthia's profit-maximizing price and quantity of tutoring hours she should provide. Instructions: In the graph below, use the demand curve provided to draw the correct marginal revenue curve 'MR. Identify the profit-maximizing price and quantity using the point tool 'A', and shade the area of economic surplus lost due to her selling at this price using the toll labelled "loss! Price ($/hour) 10- 5 10 The Tutoring Market for a monopolist 15 20 25 30 35 40 45 Quantity (hours) reset MC D MR 7 A Loss The efficient quantity is 225 hours. Dead Weight Loss caused by restricting quanity as indicated in the graph is $11.75 The amount of consumer surplus with a profit-maximizing monopolist is…Consider the competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. V AVC COSTS (Dollars per ton) 100 882 889 80 20 0 MC 5 25 30 35 QUANTITY (Thousands of tons) 15 20 10 45 40 50 The following diagram shows the market demand for steel.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
- 19 Market Representative Firm MC i of A $7 a MR = P АТС b $5 AVC $2 D1 18,000 70 100 115 Quantity (Q) Output (Q) The diagram above shows a Perfectly Competitive market on the left, and a representative firm supplying in that market on the right. If the entry of new firms into the market caused the equilibrium Price to decrease to $5, the representative firm would: Select one: а. earn a positive Economic Profit. b. earn a negative Economic Profit. c. shut down in the short-run. d. earn zero Economic Profit. Price $$$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?A computer hardware firm sells both laptop computers and printers. Through the magic of focus groups, their pricing team determines that they have an equal number of three types of customers, and that these customers' reservation prices are as illustrated in the figure below. Laptop $900 $1,000 $650 Bundle $1.000 $1,150 $700 Printer Customer A Customer B $100 $150 $50 Customer C Assume for simplicity the marginal cost of production for laptops and printers is zero. If the firm were to charge only individual prices (not use the bundle price), what prices should it set for its laptops and printers to maximize profit? Assuming for simplicity that the firm has only one customers of each type, how much does it earn in total? To maximize profit using individual prices, the firm should charge a price for laptops of p= and a price for printers of p=
- 1 Mario owns a wood-fired pizza shop which imitates traditional Italian methods. She uses a unique sauce that attracts a loyal following of customers. The demand for her pizzas is q = 1650 – 250p, and her costs are TC 0.72+0.0035q. q is the number of pizzas sold per week, TC(q) is Maria's weekly total cost, and p is the price of a pizza. a) What price and output will Maria choose to maximize profits? b) Maria returns to college and asks her cousin Victor to manage her pizza business. Victor faces the same demand and cost conditions as Maria, but he decides to maximize revenue. What price and output should he choose?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 graph below depicts the cost structure for a firm in a competitive market. Use the graph to answer the following questions. Figure 14-2 Price PPPP Q₁Q₂ MC AVC ATC Quantity Refer to Figure 14-2. When price rises from P ₂ to P 3, the firm finds that All of the above are correct. marginal cost exceeds marginal revenue at a production level of Q₂. it earns normal or zero profit. O if it produces at output level Q3 it will earn a positive profit.