Consider the following demand schedule in the market: P Q 0 0 0.1 100 0.2 200 0.3 300 0.4 400 0.5 500 0.6 600 0.7 700 0.8 800 0.9 900 1 1000 a. If the price is 0.20, what is the number of firms in the market? b. Are they making profit? What will happen in the LR? c. If the price is 0.50, what is the number of firms in the market? d. What will happen in the LR?

#3 def

Think about the following categories: number of firms, type of product, pricing, market knowledge, entry and exit in the market, and the elasticity of the product. Describe any changes in these categories in the latter half of the 20th century.

Suppose that over the short run (say the next 5 years), demand for OPEC oil is given by   P = 165 – 2.5q. Here q is measured in millions of barrels a day. OPEC marginal cost per barrel is $15.   What is OPEC’s optimal level of production? What is the prevailing price of oil at that level? Many experts contend that maximizing short-run profit is counterproductive for OPEC in the long run because high price reduces buyers to conserve energy and spur competition and new exploration that increases the overall supply of oil. Suppose that the demand curve just described will remain unchanged only if oil prices stabilize at $65 per barrel or below. If oil price exceeds this threshold, long run demand (over a second five year-period) will be curtailed to P = 135 – 2.5q. OPEC seeks to maximize its total profit over the next decade. What is the optimum output and price policy? (assume all values are present values)

Using the graph answer the following questions: A: At the profit maximizing level of output, what is the firm's total revenue? B: At the profit maximizing quantity, what is the firm's total cost? C: At the profit maximizing quantity, what is the firm's profit? D: Assuming that most firms in the industry have similar costs, describe what happens in this market to bring the industry to a long-run equilibrium (where there are zero profits).

Price (dollars per flight) Price (dollars per flight) Based on the figure 14.1 problem 1 below answer the following FIGURE 14.1 questions Problem 1 a) What market structure (kind of market) it represents? 1,100| b) How many companies are included in this market and why? c) What is the total demand? 1,000 Please answer a), b) and c) separately 900 800 ATC FIGURE 14.1 700 Problem 1 600 1,100- 500 1,000 400 900 300 ATC 800 200 700 100 600 500 600 800 1,000 1,200 200 400 400 Quantity (international flights a year)

answers for question 10,11,12 and 13

The soybean industry is a constant cost industry.  A new study revealing negative health effects of soymilk permanently decreases the number of buyers in the soybean market.  Due to the decrease in demand, the equilibrium price of soybeans ______ in the long run, the equilibrium quantity of soybeans ______in the long run, and the number of firms in the market will _____ in the long run.   Word Bank: Decreases, Decreases, Decreases, Increases, Increases, Increases, does not change, does not change, does not change.

Use the following information to answer questions 1 to 5. A firm is deciding whether or not to enter a new market. The decision tree for the firm is provided below. The prompt below the decision tree explains how the decision tree was created. Enter Do Not Enter Allowed 0.9 Denied 0.1 3 Research No Research Good 0.7 Bad 0.3 5 6 Produce Sell Produce Sell Produce Sell 8 9 10 High 0.75 Low 0.25 High 0.25 Low 0.75 High 0.6 Low 0.4 Profit (5000s) 1200 -800 -200 1200 -800 -200 1400 -600 0 -100 0 At node 1, the firm must decide whether to enter the new market or not. The cost of attempting to enter is $100,000. The upper branch from node 2 shows that the firm has a 0.9 probability of being allowed to enter the market. If the firm is allowed to enter, it will have to pay $1,500,000 to buy the facilities required to become a part of the market. Node 3 shows that the firm will then consider doing a research study to forecast demand for their new product prior to beginning production. The cost of…

DO SOMETHING WITH THE NUMBER Consider a market with free entry and exit where all firms are identical and have the following TVC schedule and a fixed cost of 32. Q           1             2             3             4             5             6              7             8             9             10 TVC     12           20           24           28           34           42           52           64           78           94 And let demand for this good be given by the following schedule. P           2             4             6             8             10             12              14             16             18             20 QD       1700      1600     1500      1400       1300        1200          1100        1000       900           800 a. Now assume that the production of this good comes with an external cost of $4.  On a graph show the supply, demand and marginal social cost for this good.  Also indicate the efficient quantity and the dead weight loss. b. Considering…