Consider a bakery that makes loaves of bread, and it has three different sites where it can produce them. The marginal costs of the three sites are: MC,(B) = 10, MC2(B) = B and MC3(B) = 2B where B denotes loaves of bread. The bread is sold in a perfectly competitive market at a price pg. The bakery wants to maximize its profits.

Consider a bakery that makes loaves of bread, and it has three different sites where it can produce them. The marginal costs of the three sites are: MC,(B) = 10, MC2(B) = B and MC3(B) = 2B where B denotes loaves of bread. The bread is sold in a perfectly competitive market at a price pg. The bakery wants to maximize its profits.

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

Suppose Madison operates a handicraft pop-up retail shop that sells rompers. Assume a perfectly competitive market structure for rompers with a market price equal to $20 per romper. The following graph shows Madison's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for rompers for quantities zero through seven (including zero and seven) that Madison produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 0 -25 □ 0 ☐ 1 2 3 5 QUANTITY (Rompers) 4 6 Total Cost 7 8 o Total Revenue Profit
Consider the market for ice cream. Suppose that this market is perfectly competitive. The cost structure of the typical ice cream producer is as follows. Average total cost is equal to 50 ATC(Q) = +;Q, average variable cost is equal to AVC(Q) Q, and marginal cost is equal to MC(Q) = Q. How many ice cream cones will each producer sell in a long-run equilibrium in the market for ice cream?
Consider the weekly market for gyros in a popular neighborhood close to campus. Suppose this market is operating in long-run competitive equilibrium with many gyro vendors in the neighborhood, each offering basically the same gyros. Due to the structure of the market, the vendors act as price takers and each individual vendor has no market power. The following graph displays the supply (S = MC) and demand (D) curves in the weekly market for gyros. Place the black point (plus symbol) on the graph to indicate the market price and quantity that will result from competition. PRICE (Dollars per gyro) 5.0 PRICE (Dollars per gyro) 4.5 4.0 3.5 1.0 0.5 5.0 4.5 4.0 0.5 0 0 10 20 0 10 30 Now assume that one of the gyro vendors successfully petitions the neighborhood development board to obtain exclusive rights to sell gyros in the neighborhood. This firm buys up all the rest of the gyro food trucks in the area and begins to operate as a monopoly. Assume that this change does not affect demand and…
In competitive markets, there are many small firms with each firm unable to influence the market price. Suppose company ABX operates in the wheat market. The company produces and markets wheats at a Price = $20 per container. The firm’s total costs are given as: TC = 50 +2Q + 3Q2 What level of output should the firm produce? Hint: Set P = MC and solve for Q. Use a graph to show your answers as well
Consider the weekly market for gyros in a popular neighborhood close to campus. Suppose this market is operating in long-run competitive equilibrium with many gyro vendors in the neighborhood, each offering basically the same gyros. Due to the structure of the market, the vendors act as price takers and each individual vendor has no market power. The following graph displays the supply (S = MC) and demand (D) curves in the weekly market for gyros. Consider the welfare effects that result from the industry operating as a competitive market versus a monopoly. On the monopoly graph, use the black points (plus symbol) to shade the area that represents the loss of welfare, or deadweight loss, caused by a monopoly. That is, show the area that was formerly part of total surplus and now does not accrue to anybody. Deadweight loss occurs when a market is controlled by a monopoly because the resulting equilibrium is different from the (efficient) competitive outcome. In the…
In competitive markets, there are many small firms with each firm unable to influence the market price. Suppose company ABX operates in the wheat market. The company produces and markets wheats at a Price = $20 per container. The firm’s total costs are given as: TC = 50 +2Q + 3Q2 Find the Firm’s marginal cost? Show your steps, including graphs. Review additional resources? Hint: See the rules for differentiation
Answer options: 0, 5, 7, 10, 15, 20, 25, Other
Which of the following characteristic(s) of competitive markets is(are) necessary for a perfectly competitive firm to be a price-taker? i) There are many sellers and buyers. ii) Firms produce identical products. iii) Sellers and buyers are well informed. iv) There is no restriction on entry or exit. Group of answer choices (i) and (ii) only (i), (ii) and (iii) only (iii) only (iv) only
Suppose jumbo packs of notepads are sold in a perfectly competitive market for $20. To produce jumbo packs of notepads, an individual firm has a cost function of C=2+ Q2. What is the firm's profit? Multiple Choice $102 $100 $98 $45
Hand written solutions are strictly not acceptable.
A small town has two bakeries, Acme and Fat Apple. Acme's marginal cost to make loaf of bread is $1 and Fat Apple's marginal cost is $2. Acme's demand function is given as Q₁ = 14 - P₁ - 0.5P2 and Fat Apple's demand function is Q2 = 19 -0.5P1 - P2 where P₁ (P2) is Acme (Fat Apple)'s price in dollars per loaf of break and Q₁ (Q2) is measured in thousand loaves of Amce (Fat Apple)'s bread (respectively). Find Nash equilibrium prices. O O O P1 = 10.2 and P2 = 9.2. P1 = 5.2 and P2 = 9.2. P1 = 4.4 and P2 = 8.2. P1 = 5.5 and P2 = 9.
Assume that when the price of cantaloupes is $2.50 the demand for cantaloupes is unit-elastic, and that the demand curve for cantaloupes is linear and downward sloping. If firms lower the price of cantaloupes to $2.00 which of the following statements can be made regarding the price elasticity of demand for cantaloupes? O The demand for cantaloupes at $2.00 must be inelastic. O We cannot determine whether the demand for cantaloupes is elastic or inelastic without knowing what the quantity demanded is at each price. O The demand for cantaloupes at $2.00 must be elastic. O The demand for cantaloupes at $2.00 must be unit-elastic.