11. Problems and Applications Q11Suppose that each firm in a competitive industry has the following costs:Total Cost:TC = 50 + q?Marginal Cost: MC = qwhere q is an individual firm's quantity produced.The market demand curve for this product is:Demand Qp= 120 – Pwhere P is the price and Q is the total quantity of the good.Each firm's fixed cost is $What is each firm's variable cost?50 + 9 Which of the following represents the equation for each firm's average total cost?50 + 950Complete the following table by computing the marginal cost and average total cost for q from 5 to 15.Marginal CostAverage Total Cost(Units)(Dollars)(Dollars)78.9101112131415The average total cost is at its minimum when the quantity each firm produces (q) equals+

11. Problems and Applications Q1 Suppose that each firm in a competitive industry has the following costs: TC = 50 + →q² Total Cost: Marginal Cost: MC = q where is an individual firm's quantity produced. The market demand curve for this product is: Demand Qp = 120 – P where P is the price and Q is the total quantity of the good. Each firm's fixed cost is $ What is each firm's variable cost? 50 + 9 1/2

11. Problems and Applications Q1 Suppose that each firm in a competitive industry has the following costs: TC = 50 + →q² Total Cost: Marginal Cost: MC = q where is an individual firm's quantity produced. The market demand curve for this product is: Demand Qp = 120 – P where P is the price and Q is the total quantity of the good. Each firm's fixed cost is $ What is each firm's variable cost? 50 + 9 1/2

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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11. Problems and Applications Q11 Suppose that each firm in a competitive industry has the following costs: Total Cost: TC = 50 + q? Marginal Cost: MC = q where q is an individual firm's quantity produced. The market demand curve for this product is: Demand Qp = 120 – P where P is the price and Q is the total quantity of the good. Each firm's fixed cost is $ What is each firm's variable cost? 50 + 9
1. Suppose a perfectly competitive firm has a cost function described by TC = 200Q+Q² +225 Each firm's marginal revenue is $240. a. Find the profit maximizing level of output. b. Is this a short-run or long-run situation? How do you know? c. Assuming that this firm's total cost curve is the same as all other producers, find the long-run price for this good.
2. Consider a competitive market where there are two types of firms, Type A and Type B, with total cost functions TC(q) = 2+4q+q² TCB (q) = 8+4q+6q² (a) Derive the short-run supply curve for each firm type (b) What is the short-run market supply, if there are 6 Type A firms, and 12 Type B firms? What is total quantity produced when p=10? (d) How does your answer at (c) change if we consider long run supply rather than short run? Here, assume again that p=10 and that there are 6 Type A firms and 12 Type B firms.
11. Calculating %age Exx *3* When the price of product "X" increases 15 percent (+15%), the quantity demanded of "X" decreases 12 percent (-12%). The price elasticity of demand for "X" is: O "-1.25" and the demand for "X" is "relatively inelastic." "-1.25" and the demand for "X" is "relatively elastic." O "-1.25" and "X" is a "normal" good. O "-0.80" and the demand for "X" is "relatively elastic." O "-0.80" and the demand for "X" is "relatively inelastic." Save & Continue Continue without saving
6. Consider the following information: TC = 20 + 5Q + Q2 Q = 25 – P Where TC is total cost, Q is the total product and P is price. What is the correct expression for total profit? a. 20Q + 5Q2 +20 b. 20 – 2Q2 – Q c. 20Q – 2Q2 – 20 d. Q + 2Q2 + 20
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4) Explain why a firm should continue to operate in the short run so long as market price is greater the firm's average variable cost at the profit-maximizing level of output.
2. Consider a market with 90 firms, each firm has a short-run total cost function as follows: TC(q) = 5q2, and a marginal cost function: MC(q) = 10q. Market demand is given by equation Qd(p) = 200 - p. a. What is the fixed cost? Solve the average variable cost function in the short-run. b. What is the supply function of each firm? c. Solve for the short-run equilibrium outcome: P*, Q* and q*. d. What is one firm's economic profit in this market? e. Consider a different market structure, where there is only one firm, interpreted as a monopolist, and then critically discuss the impact on equilibrium price and quantity. Discuss total surplus for these two types of market structures.
7. Short-run supply and long-run equilibrium Consider the competitive market for ruthenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph. COSTS (Dollars per pound) 100 90 80 70 40 30 20 10 0 0 MC D 5 10 ATC 15, 15 AVC ☐ 15 20 25 30 35 QUANTITY (Thousands of pounds) 40 + 45 50 The following graph plots the market demand curve for ruthenium. (?)
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