Suppose there are ten identical firms in an industry. The cost function for each firmis:c (y)y² + wywhere y is the firm's output of the homogenous good, and where w is the wage rateof workers in the industry. Suppose further that w = 1.9Qs, where Qs denotes totalindustry output.(a) Find the industry supply function assuming symmetry.(b) Suppose market demand is Qp = 6 – p, where p is the output price. Find theprice, market quantity, wage rate, and total surplus in equilibrium.(c) Now suppose that the government imposes a unit excise tax of $1. What happensto the equilibrium price, market quantity, and total surplus in this case?om

Answer a) The wage rate is given as 1.9Qs Therefore the industry to survive price will be more than…

Answered: Suppose there are ten identical firms…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A firm produces two substitute goods . Their demand curves and total cost function are given below : P1 = 130 - 4Q1-Q 2 P2 = 160-2Q1-5Q2 TC = 2Q1 +2Q1Q2 + 4Q 2 ( a ) Determine the profit maximizing outputs of both goods . ( Restrict your answers to 2 decimal points ) ( b ) Find the price elasticity of demand . ( c ) Evaluate the second order " Hessian " required for profit to be maximized .
Making dresses is a labor-intensive process. Indeed, the production function of a dressmaking firm is well described by the equation Q = L − L2∕800, where Q denotes the number of dresses per week and L is the number of labor hours per week. The firm’s additional cost of hiring an extra hour of labor is about $20 per hour (wage plus fringe benefits). The firm faces the fixed selling price, P = $40. Over the next two years, labor costs are expected to be unchanged, but dress prices are expected to increase to $50. What effect will this have on the firm’s optimal output? A- Increase B- Decrease C- No Effect
You hired a mathematician (who never took a Natural Resource Economics class) to solve a 4 period nonrenewable resource problem assuming a competitive industry and a total resource constraint of 100. He returns an answer to you where per period output levels are increasing and he gets a lambda value: 1 = -3.45. From this you conclude: Demand is too low for the constraint of 100 to be binding. Therefore there is no scarcity. The mathematician must have made a mathematical mistake. Competitive firms place no weight on the future and therefore behave like there is no opportunity cost of extracting a resource today. Demand is too high to support the extraction of the resource so the marginal user cost become negative.
Hello, I would like to request help with the below discussion question for my Quantative Analysis class. For a certain company, the cost function for producing x items is C(x)=50x+150 and the revenue function for selling x items is R(x)=-0.5(x-130)^2+8,450. The maximum capacity of the company is 180 items. The profit function P(x) is the revenue function R(x) (how much it takes in) minus the cost function C(x) (how much it spends). In economic models, one typically assumes that a company wants to maximize its profit, or at least make a profit! Answer to some of the questions are given below so that you can check your work. 1. Assuming that the company sells all that it produces, what is the profit function? P(x)=_____________ 2. What is the domain of P(x)? 3. The company can choose to produce either 80 or 90 items. What is their profit for each case, and which level of production should they choose? Profit when producing 80 items = _____________ Profit when producing 90…
K0.8 10.2 Consider a firm with the production function F(K, L) 10. (Concretely, imagine that due to technological imperfections, the first 10 units of output are unus- able, so that if the firm produces 100 units of a good, only 90 are of sufficient quality). If the firm is currently using L = 20 units of labor and K = 20 units of capital, what is the elasticity of substitution? (a) 1 (b) 2 (c) 4 (d) 8 (e) 10 =
c) Instead of introducing the 20% corporate tax in part (b), the government decided to add an ad valorem input tax of 100% to input 2. What is the profit-maximizing amount of each input to use? What is the profit-maximizing output? How much is Rodrigo’s new profit?
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Determining the Effect of Taxes on a Market Suppose all firms in a constant cost industry have identical costs of C(q)=5q²+6q+20. The market demand is Qo=256 – 2p. (a) Find the long-run equilibrium: Q*, q*, p*, and N*. (b) Suppose the government restricts the market to 41 firms. To do so, firms are required to get i permit to operate, but only 41 permits are issued in total. Find the equilibrium price and quantity. (c) Suppose instead of permits, the government simply charges all firms a fixed fee to operate of F=60. What is the resulting equilibrium price, quantity, and number of firms?

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