Q4) Answer the following, providing a graphical illustration along with your answer where necessary: a) What is the profit maximising condition? b) Explain what is meant by abnormal profit? What is the adjustment process from short-run abnormal profit to long-run equilibrium in a perfectly competitive market? c) Please find below Pricing options for firm A and B along with individual payoffs

Q4) Answer the following, providing a graphical illustration along with your answer where necessary: a) What is the profit maximising condition? b) Explain what is meant by abnormal profit? What is the adjustment process from short-run abnormal profit to long-run equilibrium in a perfectly competitive market? c) Please find below Pricing options for firm A and B along with individual payoffs

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Quiz: Quiz 6 Question 13 of 25 Assume a competitive firm faces a market price of $100, a cost curve of: C= 1.00g + 25q + 1,600 and a marginal cost curve of: MC = 2.00g + 25. The firm's profit maximizing output level is 37.50 units, the profit per unit is $-5.17, and total profit is: $- 193.88. However, if the firm wanted to maximize the profit per unit, how much would it produce? It would produce units. (round your answer to two decimal places) If the firm produced this output level, what would be the profit? Its profit would be $ (round your answer to the nearest penny) II
Refer to the diagram to the right. The equation for market demand is given by: D(p) 950 10p 100.00 90.00- 80.00- The equation for the supply curve of all other firms is given by: So(p)=-400+20p At the market equilibrium price of $45.00, the residual demand for a given firm is: ☐ units (enter your response as an integer). At a market price of $42.31, the residual demand for this same firm is: ☐ units (enter your response as an integer). AQ The slope of this firm's residual demand curve is: ΔΡ (enter your response as an integer. Include a minus sign if necessary). -C Price 70.00- 60.00- 50.00-45.00 40.00- 30.00- 20.00- 10.00- 0.00+ The Market 500 p = 42.3° 0 100 200 300 400 500 600 700 800 900 1 Quantity (per week)
Suppose the market referred to in the previous problem is suddenly hit by a decrease in tastes and preferences. What will happen to Q in this market in the long run (relative to the initial equilibrium)? a) It will decrease b) It will not only decrease but fall to zero c)It will be unchanged d) It will increase e) It will be affected by what is known as the “Kazarosyan Effect”
choose the right answer: a) q=4, profit=4 b) q=6, profit=2 c) q=3, profit=6 d) q=2,profit=4.
The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) for a firm are shown in the figure below. The market price is $26. Instructions: Use the tool provided (Pt. A) to identify the profit-maximizing output. Then use the tool "Profit" to draw the area of profit (or loss) that occurs at this level of output. Position this rectangle by dragging on the vertices. Price/Cost ($) 50 r Tools MC 40 Pt. A Profit ATC 30 AVC 20 10 10 20 30 40 50 Quantity Instructions: Round your answer to the nearest whole number. Use a negative sign if necessary. At the profit-maximizing level of output, average total cost is $ and profit is $
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
Q2: Derive theoretically and graphically the supply curve of an industry.
Consider a perfectly competitive market where the demand for the good is given by Q-769-5p, where Q denotes the quantity demanded at price p. On the supply side, the good can be produced by identical firms. The total cost of the industry as a function of total output, Q, is given by C(Q) = 5 Q What is the (long run) equilibrium quantity in this market? (As usual, you must enter a number below, not a ratio, not an expression with symbols..., just a number.)
(Please attempt thus question if you will provide Solution for both questions below...thanks) 1) If a firm wanted to reduce the annual EOQ cost as a percentage of the annual purchase cost by 50 percent, how would the demand rate have to change? A) Decrease by 50 percent. B) Remain unchanged. C) Increase by 50 percent. D) Double. E) Quadruple. Select correct option and explain answer with Calculation. 2) A firm evaluates its EOQ quantity to equal 180 cases, but it chooses an order quantity of 200 cases. Relative to the order quantity of 180 cases, the order quantity of 200 cases has A) higher ordering cost and higher holding cost. B) higher ordering cost and lower holding cost. C) lower ordering cost and higher holding cost D) lower ordering cost and lower holding cost.
For each lettered space in the following table, determine the appropriate dollar amount (See the chart attached) Assume that the above cost data is for a perfectly competitive firm. Using this data answer the following: (a) If the market equilibrium price that this firm charges is $50, what level of output must this firm produce to maximize its profit? (b) What would be the amount of profit that this firm would earn if it produced at the profit-maximizing level of output? 3. You read in a business magazine that farmers are reaping high profits. With the theory of perfect competition in mind, what do you expect to happen over time (in the long run) to each of the following? a. The prices of agricultural products b. The profits of farmers c. The equilibrium output in agricultural markets d. The number of farms 4. Distinguish between economies of scale and diseconomies of scale. Give examples of why a…
Question 2 a) The supply curve of a product is Q = b) The number of kilograms Q of tomatoes harvested from a field in a day is given by the production function, Q = 150L¹/³. Find the profit maximizing number of people to employ on this farm if each kilogram of tomatoes is sold for 20 cedis, and each worker is paid an average wage of 40 cedis per day. c) A firm is breaking even in a competitive market. Is this firm making zero profits? Explain d) A car wash business washes 11,000 cars per year. The price charged per vehicle washed is 10 cedis. The total cost (total economic cost) of washing these 11000 cars each year is given as 120,000 cedis. Included in this total cost is a fixed cost of 15 percent of the 160,000 cedis capital provided by the financier of this car wash. That is, the financier could have earned 15 percent interest on this capital in the money market if he had not used it to set up this car wash. Is this car wash making profits at the end of the year? Compute the…
Consider a competitive market, dispersed among hundreds of companies. The Total Cost Curve of these firms is given by: CT = 5,000+2q² -400q. Assuming the market price is $800.00 per unit of product, ask: a) What is the quantity capable of maximizing the profit of competitive companies? b) What can we say about this market, in terms of its long-term equilibrium? c) Graphically sketch the results of questions (a) and (b).