Suppose firm VACC produces in a (perfectly) competitive industry and has the cost function C = 300 + 2q^2 + 15q where q is its output level. a) What are VACC's marginal cost? b) How much output will VACC produce for a price P = 115? c) Compute VACC's profits. d) What is the difference between a firm's profits and producer surplus ? (Can you give an intuition for the concept of producer surplus ?) e) What is VACC's producer surplus ?

Suppose firm VACC produces in a (perfectly) competitive industry and has the cost function C = 300 + 2q^2 + 15q where q is its output level. a) What are VACC's marginal cost? b) How much output will VACC produce for a price P = 115? c) Compute VACC's profits. d) What is the difference between a firm's profits and producer surplus ? (Can you give an intuition for the concept of producer surplus ?) e) What is VACC's producer surplus ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

There are 80 firms of type A and 60 firms of type B in a perfectly competitive market. On one hand, type A firm faces a fixed cost (all sunk) of $12 and average variable cost is 2q. On the other hand type B firm faces a fixed cost (all sunk) of $10 and the variable cost is 3q. Market demand function is given by Q=1200-70 P. Find the equilibrium price in the market. $7 $8 $12 $10
Consider a perfectly competitive market with 16 identical firms that each have a marginal cost function ofMC(q) = 3q. If the market price is $35 , what is the market producer surplus? a.) Calculate the market producer surplus $ (enter your answer as a whole number)
Lily's bakery operates in a perfectly competitive market where the prevailing price for a pumpkin (her only product) is $3. If Lily's marginal cost function is given by MC=0.1q: (i) Lily's profit-maximizing level of output is _______ (ii) Lily's variable profit is _______ (iii) The producer surplus is _______ If Lily also has a fixed cost of $50, then: (iv) her total profit is _______ Assuming Lily cannot avoid the fixed cost, should Lily continue to produce orshut down?
Fruit market (a perfectly competitive market), the industry demand and supply of tomato (a homogenous product) is given by the following equations respectively: Qd = 50 − P Qs = 1 + 3P The typical firm’s total cost is given by the following equation: TC = 10 + 0.5Q2 + 5Q What is the equilibrium price and quantity in this market? What is the firm’s MC function? What is the MR function? What is the profit maximizing level of output for the firm? How much profit is this firm earning? Show it graphically Is it short run or long run? Explain!
Consider a housing market in which the rental properties are owned by 10 price-taking compa- nies. The cost function for each company is Jo C(q) = if q ≤ 10 if q> 10. That is, each company can offer any quantity up to its available rental space 10 at no cost, but it cannot offer any more than 10. Suppose the market demand is given by D(p) = 1000 p if p 1000, (c) Determine the point-price elasticities of demand and supply and state whether at the equilibrium price, they are elastic or inelastic. (d) Suppose the government imposes a 20% value added tax on rent. Calculate the equilibrium supply of housing, and determine the price paid by tenants and the price received by housing companies in equilibrium. Does the tax hurt tenants or create a dead- weight loss? Explain your answer!
Question 2 Suppose that the cost function of a firm is C(q)=4q. Suppose that this is the only firm in the market, and demand is Q(p)=10-p. What is the Producer Surplus in a competitive equilibrium in this economy? 2 1 6 0 12
There are 80 firms of type A and 60 firms of type B in a perfectly competitive market. On one hand, type A firm faces a fixed cost (all sunk) of $12 and average variable cost is 2q. On the other hand type B firm faces a fixed cost (all sunk) of $100 and the variable cost is 3q. Market demand function is given by Q=D1200-70P. Find the equilibrium quantity of a type A firm and its profit, respectively. q-3, profit-$6 q-2, profit-$4 Oq=4, profit=$4 Oq=5, profit=$23
There are 80 firms of type A and 60 firms of type B in a perfectly competitive market. On one hand, type A firm faces a fixed cost (all sunk) of $12 and average variable cost is 2q. On the other hand type B firm faces a fixed cost (all sunk) of $10 and the variable cost is 3q. Market demand function is given by Q = 1200 - 70P Find the equilibrium price in the market . 8 12 10 7 There are 80 firms of type A and 60 firms of type B in a perfectly competitive market. On one hand, type A firm faces a fixed cost (all sunk) of $12 and average variable cost is 2q. On the other hand type B firm faces a fixed cost (all sunk) of $10 and the variable cost is 3q. Market demand function is given by Q = 1200 - 70P Find the equilibrium price in the market . 8 12 10 7
Farmer Jones grows sugar. The total revenue, marginal revenue, total cost, and marginal cost of producing various quantities of sugar (bushels in 1000s) are presented in the table below. Total Revenue Output (bushels in 1000s) Marginal Revenue 0 1 2 3 4 5 6 $0 150 300 450 600 750 900 150 150 150 150 150 150 Suppose the market for sugar is perfectly competitive. To maximize profits, farmer Jones should produce At that level of output, farmer Jones will earn profit of $ Total Cost 0 120 200 240 320 480 680 Marginal Cost 120 80 40 80 160 200 thousand bushels of sugar. (Enter a numeric response using an integer.)
Each of 1,000 identical firms in the competitive peanut butter industry has a short-run marginal cost curve given by SMC = 3 + Q. If the demand curve for this industry is P= 12 1,000 ? what will be the short-run loss in producer and consumer surplus if an outbreak of aflatoxin suddenly makes it impossible to produce any peanut butter? Instructions: Round your answers to the nearest whole number. Producer surplus: $ Consumer surplus: $