Suppose that each firm in a competitive industry has the following costs: Total Cost: TC=50+12q2TC=50+12q2 Marginal Cost: MC=qMC=q where qq is an individual firm's quantity produced. The market demand curve for this product is: Demand QD=140−2PQD=140−2P where PP is the price and QQ is the total quantity of the good. Each firm's fixed cost is . What is each firm's variable cost? 50+12q50+12q
Suppose that each firm in a competitive industry has the following costs: Total Cost: TC=50+12q2TC=50+12q2 Marginal Cost: MC=qMC=q where qq is an individual firm's quantity produced. The market demand curve for this product is: Demand QD=140−2PQD=140−2P where PP is the price and QQ is the total quantity of the good. Each firm's fixed cost is . What is each firm's variable cost? 50+12q50+12q
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose that each firm in a competitive industry has the following costs:
| Total Cost: | TC=50+12q2TC=50+12q2 |
| Marginal Cost: | MC=qMC=q |
where qq is an individual firm's quantity produced.
The market demand curve for this product is:
| Demand | QD=140−2PQD=140−2P |
where PP is the price and QQ is the total quantity of the good.
Each firm's fixed cost is
.
What is each firm's variable cost?
50+12q50+12q
12q12q
qq
12q212q2
Which of the following represents the equation for each firm's average total cost?
50q+12q50q+12q
50q50q
50+12q50+12q
12q12q
Complete the following table by computing the marginal cost and average total cost for qq from 5 to 15.
|
q
|
Marginal Cost
|
Average Total Cost
|
|---|---|---|
|
(Units)
|
(Dollars)
|
(Dollars)
|
| 5 |
|
12.50 |
| 6 |
|
11.33 |
| 7 |
|
10.64 |
| 8 |
|
10.25 |
| 9 |
|
10.06 |
| 10 |
|
10.00 |
| 11 |
|
10.05 |
| 12 |
|
10.17 |
| 13 |
|
10.35 |
| 14 |
|
10.57 |
| 15 |
|
10.83 |
The average total cost is at its minimum when the quantity each firm produces (qq) equals
.
Which of the following represents the equation for each firm's supply curve in the short run?
12q212q2
qq
50−q50−q
120−12q2120−12q2
In the long run, the firm will remain in the market and produce ifq≥10q≥10 .
Currently, there are 8 firms in the market.
In the short run, in which the number of firms is fixed, the equilibrium price is
and the total quantity produced in the market is
units. Each firm produces
units. (Hint: Total supply in the market equals the number of firms times the quantity supplied by each firm.)
In this equilibrium, each firm makes a profit of
. (Note: Enter a negative number if the firm is incurring a loss.)
Firms have an incentive to the market.
In the long run, with free entry and exit, the equilibrium price is
, and the total quantity produced in the market is
units. There are
firms in the market, with each firm producing
units.
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