Commodity X is produced domestically by a perfectly competitive industry under conditions of increasing costs. Each firm has the following long-run total cost function. LTC=0.1q3 -1.6q2 + (70+ 0.005Q) q Where q is the firm's output per week, and Q is the output of the entire domestic industry. Since each firm operates competitively, each considers Q to be beyond its control and ignores the insignificant contributions of its own. q to industry Q. X can also be imported or exported at a constant price of $10 per unit. There are no transport costs. The domestic market demand curve is given by the equation: X=27, 900 -1,500P Where X is total domestic purchases per week, and P is the price per unit. What quantity is imported or exported per week? How many domestic firms are there?
Commodity X is produced domestically by a perfectly competitive industry under conditions of increasing costs. Each firm has the following long-run total cost function. LTC=0.1q3 -1.6q2 + (70+ 0.005Q) q Where q is the firm's output per week, and Q is the output of the entire domestic industry. Since each firm operates competitively, each considers Q to be beyond its control and ignores the insignificant contributions of its own. q to industry Q. X can also be imported or exported at a constant price of $10 per unit. There are no transport costs. The domestic market demand curve is given by the equation: X=27, 900 -1,500P Where X is total domestic purchases per week, and P is the price per unit. What quantity is imported or exported per week? How many domestic firms are there?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Commodity X is produced domestically by a
of increasing costs. Each firm has the following long-run total cost function.
LTC=0.1q3 -1.6q2 + (70+ 0.005Q) q
Where q is the firm's output per week, and Q is the output of the entire domestic industry. Since
each firm operates competitively, each considers Q to be beyond its control and ignores the
insignificant contributions of its own. q to industry Q.
X can also be imported or exported at a constant
costs.
The domestic market
X=27, 900 -1,500P
Where X is total domestic purchases per week, and P is the price per unit.
- What quantity is imported or exported per week?
- How many domestic firms are there?
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