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- COURSE: ECONOMICS A competitive firm has a marginal cost function CM = 6 + 4q and market price is P = $12.a) What the firm's level of output?b) What producer surplus? Hint: graph and computec) Assume that Average Variable Cost is AVC = 6 + 2q and Fixed Costs FC = $6; does firm have a positive, negative or zero profit? ExplainA mattress company operates in a perfectly-competitive environment. If the firm can increase its profits by increasing output, O price is greater than marginal cost. O price is less than marginal cost. O price is equal to marginal cost. losses are minimized.Refer to Figure P. For any price in this market that exceeds ____, firms would be encouraged to enter the market. a)P₂. b)P₁. c)P₄. d)P₃.
- 1. Competitive market Practice problem Wheat farmer Joe has the cost function of C(q) 160,000 + 100q+q². The market for wheat is competitive and there are many farmers like this, with the same cost function. The demand function is Q = 15000 - 10p. = (a) In the short run, below which price should Joe shut down? (b) In the short run, there are 19 farmers like Joe (so 20 farmers in total). How much should Joe produce? What will the price be? (c) What is the price below which Joe would shut down in the long run? (d) How many farmers will operate in the long run? (e) What is the market elasticity of demand at long-run equilibrium point?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.Course: Microeconomics A given firm, which is part of a perfectly competitive market, would have following cost function: TCLR = 2X3 - 20X2 + 200XWhat will be its level of output (X) and long-run equilibrium price (P)? NOTE: TCLR is long run total cost function
- 1.- A company that works in a perfectly competitive market has a total cost function: TC = Q3 - 36Q2 + 540Q + 600 The supply and demand functions in that market are: QS = 5P -500 Qd = 4,000 -10P b) Find what benefit you will get d) Represent graphically the market equilibrium and that of the company, including the closing point e) Locate the rectangle that represents profits on the company's equilibrium graph. Calculate your área considering the values taken by the base and the height. Validate that it reaches the same result (or very close) to the one obtained in part b).equilibrium4. A printer paper manufacturer sells its highly standardized product in a perfectly competitive market, at a price of TL50 per box. The firm has a fixed cost of TL30. Fill in the following table and indicate the level of output that maximizes profit. Determine how the profit-maximizing choice of output would change if the fixed cost increased from TL40 to TL60? More generally, explain how the level of fixed cost affects the choice of output. Output (Units) 0 1 2 3 4 5 6 Total Revenue (TL/unit) Total Cost (TL/unit) Profit (TL) Marginal Revenue (TL/unit) Marginal Cost (TL/unit) 50 20 30 42 54 70
- 1. Assume a competitive firm with a cost function c(y) = y? + 10 for y > 0 and with c(0) = 0. • In a competitive market, what is the lowest price at which the firm will supply a positive quantity in long-run equilibrium?10. In a competitive market, the current equilibrium price is $200 per unit. A firm that produces Q units of output in this market has a short-run Total Cost (TC) given by TC = 8000 + 40Q + Q². What is the marginal cost for this firm? How many units should the firm produce?2. Suppose that a market consists of 650 idetical fims, all with the same cost curve: TC(q) = 325q² + 0.3. The market demand is given by Qd(p) = 50 – p (a) What is the equilibriun price and quantity? (b) What quantity must each firm produce and sell at equilibrium? (c) Do fims make positive profits in the market equilibrium? (d) Calculate consumers' surplus, producers' surplus and total surplus. (e) The government imposes a tax of 12 per unit of the product on the suppliers. What will be the new equilibrium price and quantity? (f) Do firms make positive profits at market equilibrium? (g) What will be the new consumes surplus, produces surplus and total surplus? (h) Calculate the value of the DWL imposed by the tax.