2. Consider a perfectly competitive industry where each firm has the cost structure described above. The industry supplies machines for the market with market demand D: P = 1900 – Q. a. Find the profit maximizing quantity q* each firm chooses to produce at the market price P = $1,320. Calculate economic profit of a firm. Find the market demand and calculate the number of firms in the market b. Repeat the above exercise for the market price P $720. c. Repeat the above exercise for the market price P = $620. d. Repeat the above exercise for the market price P $190. e. In the graph you developed in part 1.b. above, show a typical firm in the long run equilibrium. f. In a separate graph, show the market demand and market supply (approximately) in the long run equilibrium.

2. Consider a perfectly competitive industry where each firm has the cost structure described above. The industry supplies machines for the market with market demand D: P = 1900 – Q. a. Find the profit maximizing quantity q* each firm chooses to produce at the market price P = $1,320. Calculate economic profit of a firm. Find the market demand and calculate the number of firms in the market b. Repeat the above exercise for the market price P $720. c. Repeat the above exercise for the market price P = $620. d. Repeat the above exercise for the market price P $190. e. In the graph you developed in part 1.b. above, show a typical firm in the long run equilibrium. f. In a separate graph, show the market demand and market supply (approximately) in the long run equilibrium.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Please answer for question 2 subsection e and f

1. Calculate missing values in the table below.
a. Graph the fixed, variable and total cost curves.
b. Graph the marginal, average variable and average total cost curves.
q
VC
FC
TC
AVC
AFC
АТС
MC
0.00
3,780.00
NA
NA
NA
NA
1
400.00
700.00
900.00
4
1,000.00
5
1,050.00
6.
1,200.00
1,400.00
7
8
2,000.00
2,700.00
4,000.00
9
10
2. Consider a perfectly competitive industry where each firm has the cost
structure described above. The industry supplies machines for the market
with market demand D: P = 1900 – Q.
a. Find the profit maximizing quantity q* each firm chooses to produce at
the market price P = $1,320. Calculate economic profit of a firm. Find the
market demand and calculate the number of firms in the market
b. Repeat the above exercise for the market price P = $720.
c. Repeat the above exercise for the market price P = $620.
d. Repeat the above exercise for the market price P = $190.
e. In the graph you developed in part 1.b. above, show a typical firm in the
long run equilibrium.
f. In a separate graph, show the market demand and market supply
(approximately) in the long run equilibrium.

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