= 5] Assume several identical firms engaged in perfect competition have the short run production function Q L¹/a. Each firm pays a wage of w for each unit of labor employed and fixed costs are 10. a) Assume the firm faces a tax, t, on its output. Determine how a change in this tax will affect output (22). b) Assume the firm faces a tax, t, on its profit. Determine how a change in this tax will affect output. c) based on your answers above, which of these two taxes is preferred by a government interested in minimizing the harm to workers in the industry?

= 5] Assume several identical firms engaged in perfect competition have the short run production function Q L¹/a. Each firm pays a wage of w for each unit of labor employed and fixed costs are 10. a) Assume the firm faces a tax, t, on its output. Determine how a change in this tax will affect output (22). b) Assume the firm faces a tax, t, on its profit. Determine how a change in this tax will affect output. c) based on your answers above, which of these two taxes is preferred by a government interested in minimizing the harm to workers in the industry?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.9P

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3] Assume several identical firms have the short run production function Q = √40L and pay a wage of 10 for each unit of labor employed. Fixed costs for each firm are 100. The market demand for the good is Qd = 100,000.25P. How many firms are in the industry in the long run?
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100,000.25P. How many firms are in the industry in the long run? 4] Assume several identical firms engaged in perfect competition have the short run production function Q = AL", where 0 < a < 1. Each firm pays a wage of w for each unit of labor employed. Solve for profit maximizing quantity of a representative firm in the short-run. Then, based on your answer provide (using only words) four reasons for why this representative firm might increase production (Q). 51 Assume several identical firms engaged in perfect competition have the short runn
Suppose that each firm in a competitive industry has the following as the Total cost: TC=50+ ½q2 Where q is an individual firm’s quantity produced. The market demand curve for this product is Demand: Q = 120 – P Where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market What is each firm’s fixed cost? What is its variable cost? At what quantity efficiency of scale would be achieved? Give the equation for each firm’s supply curve Give the equation for the market supply curve for the short run What is the equilibrium price and quantity for this market in the short run? In this equilibrium, how much does each firm produce? Is there incentive for firms to enter or exit? In the long run with free entry and exit, what is the equilibrium price and quantity in this market? In the long-run equilibrium, how many firms are in the market? I want the subparts 4,5,6 to be solved. Thank you
Suppose that each firm in a competitive industry has the following as the Total cost: TC=50+ ½q2 Where q is an individual firm’s quantity produced. The market demand curve for this product is Demand: Q = 120 – P Where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market What is each firm’s fixed cost? What is its variable cost? At what quantity efficiency of scale would be achieved? Give the equation for each firm’s supply curve Give the equation for the market supply curve for the short run What is the equilibrium price and quantity for this market in the short run? In this equilibrium, how much does each firm produce? Is there incentive for firms to enter or exit? In the long run with free entry and exit, what is the equilibrium price and quantity in this market? In the long-run equilibrium, how many firms are in the market?
Construct a short-run supply schedule for the firm and indicate the profit or loss incurred at each output. Assume the following unit-cost data are for a purely competitive producer. ( See table below) REQUIRED: E. When the product price is set at $46, how many is the quantity supplied by the firm? F. When the product price is set at $46, how much would be the economic profit that the firm will realize per unit 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.
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 Q“(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.
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Consider a competitive firm with a profit function: T=R -C=PQ- wL-rK P=price Q=quantity %3D L= labor K = capital w, r= input prices for Labor and capital if Q function is a Cobb Douglas production functions: Q = L"KP where: a=B< 1/2 a. what is the profit max equation? b. what are the values of K, L and Q? c. verify the second-order condition