Ś 50 48 46 44 42 40 38 36 34 32 30 28 26 26 24 22 20 18 16 AVC ATC MC 14 12 10 8 6 4 2 0 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 8 8.5 9 What is the profit at this level? $64 9.5 10 10.5 At the competitive market price of P=40, what is the firm's current optimal output level? 8 If the price drops to P=20, what would be the current optimal output level? q If all firms in the industry had similar cost structures, what would be the long-run price in the market? $

Ś 50 48 46 44 42 40 38 36 34 32 30 28 26 26 24 22 20 18 16 AVC ATC MC 14 12 10 8 6 4 2 0 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 8 8.5 9 What is the profit at this level? $64 9.5 10 10.5 At the competitive market price of P=40, what is the firm's current optimal output level? 8 If the price drops to P=20, what would be the current optimal output level? q If all firms in the industry had similar cost structures, what would be the long-run price in the market? $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Figure 4.2 shows the cost curves for a typical firm in a competitive market. If there are 200 identical firms, estimate the market quantity supplied when p = 4, 8, and 10
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Questión 10 óf 18 Holiday Beach is a world-renowned beach operated by Holiday Town. The beach is remotely located and the only parking area for the beach is controlled by the town government. The graphs depict the marginal revenue (MR) and demand (D) for daily parking passes for tourists and residents. Tourists Residents Price per day Price per day $20 $207 18 18 16 14 14 12 12 D 10 - 10 8 8 6 6 MR 4 4 MR 2 1 2 3 4 6. 7 8 9. 10 1 2 3 4 7 8 9 10 Quantity of passes Quantity of passes Suppose Holiday Town issues registration plates to its residents to make it easy to determine which cars belong to residents and which cars belong to tourists. Assume the marginal cost of providing a daily parking pass is a constant $4 and Holiday Town wishes to price discriminate. What price will town residents be charged for a daily pass? $ %24
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7. A car manufacturer builds both left-hand and right-hand drive cars. It estimates that its costs and the demand faced in each of these respective markets can be modelled by the functions below Р 3D 520 — 30, P, = 720 – 4Q2 100Q1 + 120Q2 + 4Q1Q2 - - TC =
3. An industry is subject to agglomeration economies (and diseconomies). The profit per firm is £100 for an isolated firm, and increases to a maximum of £160 per firm in a cluster with 6 firms. The profit curve is linear, with a slope of +£12 in the positively-sloped part and -£10 in the negatively-sloped part. Illustrate this profit curve. What will be the equilibrium number of firms in the cluster and how much profit will each firm make? Will this be greater than the efficient number of firms? Explain why. How will an increase in transport costs affect the profit curve and the optimal cluster size? Briefly explain your answer.
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Problem 3 Squeak eClean produces commercial sanitizer used to clean tanker trucks that haul liquid food products such as milk. This sanitizer a commodity like any other and at the wholesale level, there are many domestic and foreign producers that compete vigorously. Suppose you have the following estimated market demand and supply functions for the sanitizer. Qd=248.08 +2.2Y – 0.6Pc+ 1.2 Ps − 4P Qs = 10 +2P In these equations, Q measures output in gallons per month (in 1,000's), P is the price per gallon of the sanitizer, Y is annual average household income (in 1,000's), Pc is an index of commodity prices, and Ps is the average price per gallon of other types of sanitizer. After gathering the latest data, you find that average household income is $36,400, the current level of the commodity price index is 110.6, and the average price per gallon of other types of sanitizers is $48.50. a. Find the current equilibrium price and quantity in this market. b. Find the equilibrium price and…
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You produce WORD and EXCEL. You have two customers, A and B. Willingness to pay for each item for each person appears below. A B WORD 8 14 EXCEL 23 14 In parts (a)-(c) below, suppose marginal cost is zero for both WORD and EXCEL. a) If you sell EXCEL and WORD separately, what price for each maximizes your profit? What is your total profit? b) If you bundle EXCEL and WORD together, what bundle price maximizes your profit? What is your profit? c) What is the optimal mixed bundling strategy? Is there an advantage to mixed bundling in this example? Why or why not? d) Now suppose your MC has increased from zero to 10 for each unit of EXCEL and each unit of WORD. Repeat parts (a)-(c) with this change in costs.
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