Consider the daily market for hot dogs in a small city. Suppose that this market is in long-run competitive equilibrium with many hot dog stands in the city, each one selling the same kind of hot dogs. Therefore, each vendor is a price taker and possesses no market power. The following graph shows the demand (D) and supply (S = MC) curves in the market for hot dogs. Place the black point (plus symbol) on the graph to indicate the market price and quantity that will result from competition.

Consider the daily market for hot dogs in a small city. Suppose that this market is in long-run competitive equilibrium with many hot dog stands in the city, each one selling the same kind of hot dogs. Therefore, each vendor is a price taker and possesses no market power. The following graph shows the demand (D) and supply (S = MC) curves in the market for hot dogs. Place the black point (plus symbol) on the graph to indicate the market price and quantity that will result from competition.

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

Consider the pharmaceutical company Mylan that produces epinephrine injection devices called EpiPens. In the presence of other firms producing substitutes for this good, the price of EpiPens is $150. Now suppose that competitors to Mylan no longer produce epinephrine injection devices, so Mylan now has pricing power in this market. As the economist on staff at Mylan, you are charged with the task of figuring out what your company's new pricing strategy should be. The following graph shows the marginal cost (MC), which is assumed to be constant, and the average total cost (ATC) of Mylan. The graph also shows the demand curve (D) for EpiPens and the marginal revenue curve (MR) once the firm has market power. On the graph, use the grey point (star symbol) to indicate the quantity of EpiPens demanded if Mylan continues to charge $150. Dashed drop lines will automatically extend to both axes. 1000 900 800 Qp at $150 700 600 Profit Max 500 400 ATC at Profit Max 300 ATC 200 Profit MC 100 MR 2…
Consider the competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. For each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price.
THIS EXERCISE FOR MATHEMATICAL ECONOMIC : Question (1): Suppose the estimated quantity demand for potato chips is Q = 140 – 15p and the quantity supply function for potato chips is Q = 115 + 10p. Find the equilibrium price and quantity for the number of bags of potato chips. Suppose that the main costs of producing potato chips are labor and potatoes. On a per unit basis, the cost of producing and manufacturing a bag of potato chips rises by $1.50. The firms are citing higher labor costs and fewer potatoes are grown due to the poor climate. What will be the new equilibrium price and quantity? Whichever curve you think a shift will occur, derive the new function. Suppose that a health news piece has been published indicating the ill effects of consuming potato chips. The news has been published after the firms incurred the higher costs of production. Consumers are being advised to consume popcorn or pretzels instead of potato chips. How would that affect the market for potato…
Susan owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on her property, making a large crater. The event attracts scientists and tourists, and Susan decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists (Market A) and tourists (Market B). The following graphs show daily demand ( DD ) curves and marginal revenue ( MRMR ) curves for the two markets. Susan's marginal cost of providing admission tickets is zero.
Use the photo at exercise 14 to solve the problem below Imagine that firm X chooses their quantity first, then firm Y observes the quantity of firm X and chooses their own quantity. What quantities will they end up choosing? Is there a first or second-mover advantage here? [You may assume that firm X can only choose quantities that are multiples of 200. This prevents you from having to deal with prices that are not on the schedule. Also it means you've done all the busy work already--assuming you did the assignment last week.....and got it right. So this shouldn't require a lot of calculations, just a little thinking about how equilibrium works in a sequential-move game. Oh, and just give me the quantity for each firm, don't worry about giving me a complete strategy for firm Y.]
Consider the market for ice cream cones. Suppose that supply in this market is given by PS = Q$ and demand is given by PD = 30 – 4 × QD. Answer the following questions. Notice that the competitive equilibrium (Qº,Pe) and the point (Q%,Pº) are both on the demand curve. Use them to compute the price elasticity of demand.
The market supply curve for a certain product is given by the following formula: Ps(Qg)=10+5 Qg. The demand curve is given by PDQD)=190-10QD. a) What are the equilibrium price and quantity in the competitive equilibrium? b) Draw a diagram that shows the market supply and demand curve as well as the equilibrium price and quantity. Assume that the willingness-to-pay for the product drastically increases for most of the customers: The new demand curve is perfectly inelastic (i.e., the price elasticity of demand is zero). Assume that the new equilibrium price is still at 70. c) Draw the new demand curve in your diagram from b). Briefly explain, why you drew it that way? d) What is the new equilibrium demand? e) Are the producers better off after the increase in the willingness-to-pay for the product?
Imagine that you run the toll authority for a city bridge. You must charge all of your customers the exact same toll. Initially, you have set the price at $2 per trip. The blue line on the following graph shows the weekly demand curve for trips across the city bridge. On the following graph, use the purple rectangle (diamond symbols) to shade the area representing the total weekly revenue when the toll is $2 on the graph. Notice that when you click on the rectangle, the area is displayed. (? 10 TR at $2 8 Demand 7 TR at $3 5 2 1 8 12 16 20 24 28 32 38 40 QUANTITY (Thousands of vehicles per week) An advisor has suggested that you raise the toll to $3, the toll authority would bring in more revenue. To analyze this, use the green rectangle (triangle symbols) to shade the area representing the total weekly revenue when the toll is $3 on the graph. When the toll is $2, total revenue is S per week, but when the toll is $3, total revenue is $ per week. Based on your analysis, you can…
Consider the daily market for hot dogs in a small city. Suppose that this market is in long-run competitive equilibrium, with many hot dog stands in the city, each one selling the same kind of hot dogs. Therefore, each vendor is a price taker and possesses no market power. The following graph shows the demand (D�) and supply curves (S=MC�=MC) in the market for hot dogs. Place the black point (plus symbol) on the graph to indicate the market price and quantity that will result from perfect competition. Assume that one of the hot dog vendors successfully lobbies the city council to obtain the exclusive right to sell hot dogs within the city limits. This firm buys up all the rest of the hot dog vendors in the city and operates as a monopoly. Assume that this change doesn't affect demand and that the new monopoly's marginal cost curve corresponds exactly to the supply curve on the previous graph. Under this assumption, the following graph shows the demand (D), marginal revenue…
After moving into Schine, Dunkin’ reported that their (donut) market equilibrium occurs when 450 donuts are sold at a price of $1.50 per donut. They also reported that the producer will supply no donuts when the price is $0.50 and the customers will demand no donuts at $2.00, what are that supply and demand equations, assuming that both are linear
Juanita owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on her property, making a large crater. The event attracts scientists and tourists, and Juanita decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists (Market A) and tourists (Market B). The following graphs show daily demand (D) curves and marginal revenue (MIR) curves for the two markets. Juanita's marginal cost of providing admission tickets is zero.
Imagine that you run the toll authority for a city bridge. You must charge all of your customers the exact same toll. Initially, you have set the price at $7 per trip. The blue line on the following graph shows the daily demand curve for trips across the city bridge. On the following graph, use the purple rectangle (diamond symbols) to shade the area representing the total daily revenue when the toll is $7 on the graph. Notice that when you click on the rectangle, the area is displayed. TOLL (Dollars per vehicle) 10 9 8 7 4 2 1 0 0 Demand 10 20 30 40 50 60 70 80 QUANTITY (Thousands of vehicles per day) 90 When the toll is $7, total revenue is $ 100 TR at $7 TR at $8 An advisor has suggested that if you raise the toll to $8, the toll authority would bring in more revenue. To analyze this, use the green rectangle (triangle symbols) to shade the area representing the total daily revenue when the toll is $8 on the graph. thousand per day, but when the toll is $8, total revenue is $ Based…