Consider an economy with 2 consumption goods and N consumers, all with the sameutility function:1-au(x1, x2) = xĩxa, where and E (0, 1) .The goods prices are piincome y1 and the rest have income y2.2 and p2. Among the consumers, half of them each have(a)Each firm has the cost function c(q) = Bq². Solve for the equilibrium price P2.' There are n firms operating in the competitive market for good 2.

A competitve market is one where there are large number of sellers that compete with each other in…

Answered: (a) Each firm has the cost function…

(a) Each firm has the cost function c(q) = Bq². Solve for the equilibrium price p2. There are n firms operating in the competitive market for good 2.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Assume the following inverse market demand curve given by p = a - bQ.Marginal cost of Firm 1 is m and that for Firm 2 is m + x and x > 0.Calculate the equilibrium quantities and market price.
Window cleaning is a perfectly competitive market in Boston. The daily market demand for window cleaning in Boston is Q(P) = 360 ‒ 4P, where Q represents the daily number of houses served and P is the price per house; and (2) the current market price per house served is 30. Each window-cleaning firm faces a daily total cost of TC(q) 72+ 1/2 q2, where q represents the number of houses served per day. What is the current daily profit for each window-cleaning firm? A. -72 B. 0 C. 378 D. 400 E. 578
Say the the aggregate inverse demand function is D(Q) = 100 - Q, where Q = q1+q2. Both firms have the same cost c(q)=cq. Only firm q1 is allowed to participate. Therefore, q2 = 0. Find the function that maximizes welfare. What is the demand and price when welfare is maximized?
Fruit market (a perfectly competitive market), the industry demand and supply of tomato (a homogenous product) is given by the following equations respectively: Qd = 50 − P Qs = 1 + 3P The typical firm’s total cost is given by the following equation: TC = 10 + 0.5Q2 + 5Q What is the equilibrium price and quantity in this market? What is the firm’s MC function? What is the MR function? What is the profit maximizing level of output for the firm? How much profit is this firm earning? Show it graphically Is it short run or long run? Explain!
A market has N=35 firms each with identical costs C(q)=1q2+70. Demand is QD=200-5p. What will be the short-run equilibrium price? Round to the nearest cent (0.01)
Suppose the market referred to in the previous problem is suddenly hit by a decrease in tastes and preferences. What will happen to Q in this market in the long run (relative to the initial equilibrium)? a) It will decrease b) It will not only decrease but fall to zero c)It will be unchanged d) It will increase e) It will be affected by what is known as the “Kazarosyan Effect”
A firm is a perfectly competitive producer and sells two goods X and Y, has demand function 0.1Px – 1.2 + 0.2X = 0 and 10P, – 320+40Y = 0 respectively. The total cost of producing these goods is given by : TC = x2 – 2XY – Y Find the maximum profit and the values of Q1 and Q2 at which this is achieved.
Suppose that the market inverse demand function is p(yT)=80-yT and the firm's total cost functions are C1(y1)=y21 and C2 (Y2)=10y2+y22. What is firm 1's best response to y2?
Assume a competitive firm faces a market price of $200, C = 13q3 + 4q + 750 MC = q2 +4 Profit maximizing output = 14 What is the firm's profit maximizing price?
Question 2 a) The supply curve of a product is Q = b) The number of kilograms Q of tomatoes harvested from a field in a day is given by the production function, Q = 150L¹/³. Find the profit maximizing number of people to employ on this farm if each kilogram of tomatoes is sold for 20 cedis, and each worker is paid an average wage of 40 cedis per day. c) A firm is breaking even in a competitive market. Is this firm making zero profits? Explain d) A car wash business washes 11,000 cars per year. The price charged per vehicle washed is 10 cedis. The total cost (total economic cost) of washing these 11000 cars each year is given as 120,000 cedis. Included in this total cost is a fixed cost of 15 percent of the 160,000 cedis capital provided by the financier of this car wash. That is, the financier could have earned 15 percent interest on this capital in the money market if he had not used it to set up this car wash. Is this car wash making profits at the end of the year? Compute the…