Homework 1 1. Suppose there are 100 identical firms in the perfectly competitive notecard industry. Each firm has a short-run total cost curve of the form: 1 3 C = q³ + 0.2q² + 4q + 10 300 a) Calculate the firm's short-run supply curve with q (the number of crates of notecards) as a function of market price (P). b) Calculate the industry supply curve for the 100 firms in this industry. (Answer. QS = 1000/P-2000) will be the c) Suppose market demand is given by: Q = -200P + 8,000. equilibrium price-quantity combination? (Answer. P = $25; Q = 3000 units) d) Suppose everyone starts writing more research papers and the new market demand is given by: Q =-200P + 10,000. What is the new price-quantity equilibrium? How much profit does each firm make? (Answer. T₁ = $576,14)
Homework 1 1. Suppose there are 100 identical firms in the perfectly competitive notecard industry. Each firm has a short-run total cost curve of the form: 1 3 C = q³ + 0.2q² + 4q + 10 300 a) Calculate the firm's short-run supply curve with q (the number of crates of notecards) as a function of market price (P). b) Calculate the industry supply curve for the 100 firms in this industry. (Answer. QS = 1000/P-2000) will be the c) Suppose market demand is given by: Q = -200P + 8,000. equilibrium price-quantity combination? (Answer. P = $25; Q = 3000 units) d) Suppose everyone starts writing more research papers and the new market demand is given by: Q =-200P + 10,000. What is the new price-quantity equilibrium? How much profit does each firm make? (Answer. T₁ = $576,14)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Homework 1
1. Suppose there are 100 identical firms in the perfectly competitive notecard
industry. Each firm has a short-run total cost curve of the form:
1
3
C = 5q³ + 0.2q² + 4q + 10
300
a) Calculate the firm's short-run supply curve with q (the number of crates of
notecards) as a function of market price (P).
b) Calculate the industry supply curve for the 100 firms in this industry.
(Answer. QS = 1000/P-2000)
c) Suppose market demand is given by: Q=-200P+ 8,000. What will be the
equilibrium price-quantity combination? (Answer. P = $25; Q = 3000 units)
d) Suppose everyone starts writing more research papers and the new market
demand is given by: Q =-200P + 10,000. What is the new price-quantity
equilibrium? How much profit does each firm make? (Answer. ₁ = $576,14)
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Please solve sub-part d, only the first three part was solved the last time, SOLVE QUESTION D ONLY
Transcribed Image Text:Homework 1
1. Suppose there are 100 identical firms in the perfectly competitive notecard
industry. Each firm has a short-run total cost curve of the form:
1
3
C = 5q³ + 0.2q² + 4q + 10
300
a) Calculate the firm's short-run supply curve with q (the number of crates of
notecards) as a function of market price (P).
b) Calculate the industry supply curve for the 100 firms in this industry.
(Answer. QS = 1000/P-2000)
c) Suppose market demand is given by: Q=-200P+ 8,000. What will be the
equilibrium price-quantity combination? (Answer. P = $25; Q = 3000 units)
d) Suppose everyone starts writing more research papers and the new market
demand is given by: Q =-200P + 10,000. What is the new price-quantity
equilibrium? How much profit does each firm make? (Answer. ₁ = $576,14)
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