QUESTION 17 Assume the relationship between the car repair price (SP) and the quantity demanded (q units) is P = 60- q. The total cost of repairing q units for each firm is identical and is expressed by C(q) = 36+q² Now, potential entrepreneurs are allowed to operate in this market. Thus, we consider the competitive equilibrium. Obtain the producer surplus in the market. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). XOG Arial v 10pt EVE A V Tx ...
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- The cost per unit of producing a product is 60 + 0.2x dollars, where x represents the number o produced per week. The equilibrium price determined by a competitive market is $220. a) How many units should the firm produce and sell each week to maximize its profit? What is the maximum profit?The following relations describe monthly demand and supply for a wheat Qp = 32 – P Qs = P- 16 where P is the price (in cents) per pound and Q is the quantity (in millions) of pounds. What is the equilibrium price and output level? (a) Suppose that wheat industry is a perfectly competitive industry consisting of a large number of identical firms. For a typical firm, the cost function is TC = 100 + 1000q². (b) Identify the marginal revenue of a typical firm in the industry. (c) (d) Find the profit maximizing level of output produced by a firm. If all firms are profit maximizing, then how many firms can operate in this industry?Suppose a typical (representative) corn farm has a short run production technology which results in the outcome of U-shaped Average Variable Cost (AVC), Average Total Cost (ATC), and Marginal Cost (MC). Further, suppose this firm sells its product in a market where the price of the good is determined by the interaction of market Demand and Supply. Because an individual firm is very small compared to the rest of the market, we treat the market price as the price given to the firm, and the individual firm cannot impact that price. assume we are in the Short Run for this firm. In graphing, put $ on the vertical axis and lower-case q (firm output) on the horizontal axis. Start with the AFC0, AVC0, ATC0, and MC0 curves . show shifts in any of the cost curves, reflecting the higher cost of land (keeping in mind that this higher cost is independent of how much or how little corn is actually produced) and labeling the changed cost curves with a subscript 1. On the graph with $ on the…
- Suppose the profit maximizing firm sells the same good in two individual markets that it is able to keep separate. Since the price elasticity of demand is different in each market, the firm recognizes that rather than charge all customers the same price, it can increase profits by charging different prices in each of the two markets. The demand equations for each market are shown below: Market 1 P=25-2Q Demand The firm's Total Cost Function is: TC=5Q a) What is the optimal output in Market 1? b) What price will be charged in Market 1? Market 2 P=15-Q c) what is the optimal output in market d) what price will be charged in market e) what is the firm's total profit f ) illustrate your answera) Find the long run equilibrium price. Find the minimum efficient scale of the typical firm. Find the typical firm’s average cost when it operates at minimum efficient scale. In the long run, what price will prevail in this market? In words, clearly justify your answer. Suppose demand is QD = 3,200 – 100P. (b) Explain why you expect the number of firms in this market to be fifty-five. In this market, what is the short run supply function of the typical firm? What is the short run market supply function? Suppose the local government introduced a $90 licensing fee that raised the fixed cost from $160 to $250. c) Would the introduction of the licensing fee affect the short run equilibrium price or quantity? Justify your answer? Clearly explain why you expect that in the long run fewer larger firms will operate in this market. After the introduction of the licensing fee, what is the new long run equilibrium price? How many firms will survive in this market?Suppose that all firms in a constant-cost industry have the following long-run cost curve:c(q) = 4q2 + 100q + 100The demand in this market is given by QD = 1280 - 2p. Suppose the number of firms in the market is restricted to 80a. Derive the supply curve with this restriction. Find the market equilibrium price and quantity with the restriction.b. If firms are allowed to buy and sell these permits in an open market, what will be the rental price of permits? Will firm’s that own permits make profit? Briefly explain.c. How much deadweight loss is generated by the permit system? Provide a graph showing the region of this deadweight loss.d. Suppose the government abandons the permit system and simply imposes a fixed fee on firms in the market. If the fee is set equal to the permit price you found in c., what will be the equilibrium price, quantity, number of firms and deadweight loss?
- A competitive firm has a total cost function: TC = 20 + 50q − 6q2 + q3 and a marginal cost function MC = 50 − 12q + 3q2. (a) If the market price is P = $230 per unit, the firm will supply 10 units of the good. Calculate: (i) the profit (ii) the producer's surplus (b) Assume that the market price is P = $50 per unit. Find (i) the level of output supplied by the firm (ii) the firm's profit (use a minus before your answer if the firm incurred a loss) (c) Calculate the range of prices for which the firm will find it optimal to shut down.Demand and Supply equations of a particular market are as follows.Qd = 2100 – 7PQs = – 1200 + 5PWhere, Qd is the quantity demanded, Qs is the quantity supplied and P is the market price. By all means, this market is considered as a perfectly competitive market. The average cost information of a selected firm in this market is given below.AFC = 450/QAVC = (155Q + 2Q2)/Q a) Calculate the profit maximizing output level of the firm based on Marginal approach.b) Calculate the profit (in Rupees) at the profit maximizing output level.Q6. A firm faces a market demand equation Q= 30 - P and a total cost function of TC (Q) = Q/2 with a marginal cost MC(Q) = Q. • What type of firm is this? How do you know? Find the profit maximizing price and quantity of the firm while mentioning the condition that results in profit maximization. • Calculate the profit made by the firm in part (b) Is the firm maximizing welfare? If not, what price would the firm now charge?
- Consider a competitive market for red lentils with 100 identical farmers in Horsham Victoria, a competitive market price of $5 and the following MC for each farmer: MC = $0.05Q Also consider the following market demand function: QD a) Calculate the optimal level of production (in tonnes) for each farmer (show workings) = = 1000 - 40P b) Assuming 100 lentil farmers of equal size how many tonnes of lentils in total will be supplied in the entire market? (show all workings) c) Consider that the government now imposes a 25% tax on producers, calculate i) the new equilibrium level of output for each firm (hint - think about how this affects each farmer's marginal cost), and ii) new total supply in the entire market (show all workings)You have decided to open a coffee shop in San Bernardino. While there is a lot of competition (i.e. it's a perfectly competitive market) for coffee in the area, you have developed coffee making technology to sell coffees at $3 per coffee. If the minimum wage for coffee restaurant employees is $10 per hour, and you schedule employees for 8-hour shifts ($80 a day). How many employees should you hire? Employee 1 2 3 4 5 1 2 3 4 Total output (coffees per day) 40 74 102 124 140 Marginal Product 40 34 28 22 16 Marginal Revenue Product $120 $102 $84 $66 $48 Marginal V $80 $80 $80 $80 $80The demand for bicycles is given by the equation: Q = 1000 - 5P There are currently 100 identical firms in this competitive market, each with the cost function: 25 C(q) =9 +20q + 50 2 %3! Calculate the short-run market equilibrium, including the market price and quantity, the number of units each firm will produce, and the profits of each firm. How much profit and producer surplus is each firm earning? a) b) If the government imposes a per unit tax of $90 per bicycle, how would this change the market equilibrium? How would the tax burden be shared by the consumers and bicycle manufacturers? c) If the government decides not to impose the tax, what is the long run equilibrium to include the market price and quantity, and the number of firms in the market? Assume the costs of the firms stay the same in the long run.