= 3. Assume that the manufacturing of generic medicine XYZ is a perfectly competitive industry. Suppose that the annual demand for this medicine is given by: QD 1,450-30P. There are exactly a hundred manufacturers in the market. Each manufacturer has the same production costs. These are described by total and marginal cost functions of: C(q) = 2q² + 25q +2.5 and MC(q) = 5q + 25. a. Show that an individual firih in this industry maximizes profit by producing: q = -5 +0.2P. b. Derive the industry supply curve and show that it is: QS = -500 + 20P. c. Find the market price and aggregate quantity traded at the equilibrium price. II
= 3. Assume that the manufacturing of generic medicine XYZ is a perfectly competitive industry. Suppose that the annual demand for this medicine is given by: QD 1,450-30P. There are exactly a hundred manufacturers in the market. Each manufacturer has the same production costs. These are described by total and marginal cost functions of: C(q) = 2q² + 25q +2.5 and MC(q) = 5q + 25. a. Show that an individual firih in this industry maximizes profit by producing: q = -5 +0.2P. b. Derive the industry supply curve and show that it is: QS = -500 + 20P. c. Find the market price and aggregate quantity traded at the equilibrium price. II
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![3. Assume that the manufacturing of generic medicine XYZ is a perfectly competitive industry. Suppose that
the annual demand for this medicine is given by: QD = 1,450 - 30P. There are exactly a hundred
manufacturers in the market. Each manufacturer has the same production costs. These are described by
5
total and marginal cost functions of: C(q) = q² + 25q + 2.5 and MC(q) = 5q + 25.
a. Show that an individual firm in this industry maximizes profit by producing: q = -5 +0.2P.
b. Derive the industry supply curve and show that it is: QS = -500 + 20P.
c. Find the market price and aggregate quantity traded at the equilibrium price.
d.
How much output does each firm produce?
e.
f.
Calculate each firm's profit.
Using market demand and supply functions (QD, QS):
i. Graphically represent the equilibrium in the market;
ii. Calculate producer surplus; and
iii. Consumer surplus in this competitive equilibrium.
Li
11.
total cost and demand of an individual firm in](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F09d06550-9438-46b0-bfc8-4a273fadb7f3%2F3f453cda-3974-4f83-8000-ee6fe0e54018%2Fk4qpcg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:3. Assume that the manufacturing of generic medicine XYZ is a perfectly competitive industry. Suppose that
the annual demand for this medicine is given by: QD = 1,450 - 30P. There are exactly a hundred
manufacturers in the market. Each manufacturer has the same production costs. These are described by
5
total and marginal cost functions of: C(q) = q² + 25q + 2.5 and MC(q) = 5q + 25.
a. Show that an individual firm in this industry maximizes profit by producing: q = -5 +0.2P.
b. Derive the industry supply curve and show that it is: QS = -500 + 20P.
c. Find the market price and aggregate quantity traded at the equilibrium price.
d.
How much output does each firm produce?
e.
f.
Calculate each firm's profit.
Using market demand and supply functions (QD, QS):
i. Graphically represent the equilibrium in the market;
ii. Calculate producer surplus; and
iii. Consumer surplus in this competitive equilibrium.
Li
11.
total cost and demand of an individual firm in
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 4 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question
![price
aggie to
d. How much output does each firm produce?
e. Calculate each firm's profit.
f.
Using market demand and supply functions (QD, QS):
i. Graphically represent the equilibrium in the market;
ii. Calculate producer surplus; and
iii.
Consumer surplus in this competitive equilibrium.](https://content.bartleby.com/qna-images/question/09d06550-9438-46b0-bfc8-4a273fadb7f3/fa29410f-7ff8-41e4-95a5-000bc9b2e59e/ibqbqo_thumbnail.jpeg)
Transcribed Image Text:price
aggie to
d. How much output does each firm produce?
e. Calculate each firm's profit.
f.
Using market demand and supply functions (QD, QS):
i. Graphically represent the equilibrium in the market;
ii. Calculate producer surplus; and
iii.
Consumer surplus in this competitive equilibrium.
Solution
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education