Apple cider is produced in a perfectly competitive market. Firms are identical and all have the short run cost function C(q) = 50+ 50q+q² Assume that there are 10 firms in this industry. The market demand for cider is D(p) = 400-p (a) What is the short run equilibrium price? (b) What would be the deadweight loss if the price was mandated to be p = 120?

Apple cider is produced in a perfectly competitive market. Firms are identical and all have the short run cost function C(q) = 50+ 50q+q² Assume that there are 10 firms in this industry. The market demand for cider is D(p) = 400-p (a) What is the short run equilibrium price? (b) What would be the deadweight loss if the price was mandated to be p = 120?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 10PA

See similar textbooks

Similar questions

Y6 Suppose that a market consists of 300 identical firms, all with the same cost curve: TC(4) = 0.1 + 150g?. The market demand is given by Qd(p) = 60 - p (a) What is the equilibrium price and quantity? (b) What quantity must each firm produce and sell at equilibrium? (c) Do firms make positive profits in the market equilibrium? (d) Calculate consumers' surplus, producers' surplus and total surplus.
The figure below shows the supply and the demand for a good (left) and the cost curves of an individual firm in this market (right). Assume that all firms in this market, including the potential entrants, have identical cost curves. Initially, the market is in equilibrium at point A. Price 6 Cost 17 D 8 10 12 Quantity ATC O the price is $1.00 and the quantity sold is 6 units O the price is $3.00 and the quantity sold is 2 units O the price is $2.00 and the quantity sold is 2 units O the price is $2.00 and the quantity sold is 4 units Quantity Refer to the figure above. Suppose that the market has reached the long-run equilibrium. Then, due to news of the product's defects and recall, the demand falls by 2 units at each price. The market will tend toward the new long run equilibrium where
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.
5. The market demand for leather handbags is given by the function P = 75 - 1.5Q. P is priceper handbag, and Q is output per time period.The market supply is given as P = 25 + 0.50Q. A typical competitive firm that markets thistype of bag has a marginal cost of production of MC = 2.5 + 10q. [4]a) Calculate the market equilibrium price for the bags as well as the output rate in themarket.b) Calculate how much the typical firm will produce per time period at the equilibriumprice.c) If all firms had the same cost structure, how many firms would compete at theequilibrium price computed in (a) above?
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?
In a purely competitive market at its long-run equilibrium, which of the following is not true? a The marginal benefit of the last unit of the product equals the marginal cost of producing that unit. b The maximum willingness of buyers to pay for the last unit of the product equals the minimum acceptable price for the seller of that unit. c Price equals marginal cost, and they are equal to the lowest attainable average cost of production. d The combined amount of consumer and producer surpluses is at its minimum possible.
Assume that a firm in a competitive market faces the following cost information. If the market price for this firm's product is $40, calculate the profit maximizing level of output for this firm using marginal analysis. a.Approximately where do you think the price will end up in this market over the long run? b.Last, instead of assuming a given price, how would you go about finding the equilibrium price if you were given information on market demand?
Suppose the competitive tablet market is in long-run equilibrium. If at this equilibrium, the typical firm produces 20,000 tablets per month, total costs for this production are $1,800,000, and the minimum of the average variable costs is $70, what price will Instructions: Enter your responses as a whole number. a. induce entry into the market? When the price rises above $ b. cause firms to shut down production in the short run?
A5 5. Suppose the market is perfectly competitive. The equilibrium market price P = $20. A consumer's willingness to pay (WTP) is WTP = 30 - q. (a) How much this consumer will buy and wh (b) How much a typical firm will produce the firm's marginal cost MC = 2q. If the average total cost is ATC = q, can you tell if this firm is making positive, negative, or zero economic profit (c) It is assumed here that all firms are identical. In what sense are they identica (d) Suppose now that one firm's marginal cost is: MC = 25/q. Can this industry still remain perfectly competitive? Why not?l?s?y?
I NEED İT VERY URGENTLY
Solve it correctly
7. A competitive firm participates in a market where market demand & supply are given by QD=85,000-5000P Qs = 40,000+ 2500 P Find the market equilibrium price. Plot a graph of the demand curve facing the firm. Given that the marginal cost curve of the firm is given by the following: MC = 2q, calculate the profit maximizing quantity that the firm will produce. Assume that FC=0. Calculate the profit of the firm at this quantity. a. b. C.