The market demand for a type of carpet has been estimated as P = 400 25Q, where P is price (S/yard),and Q is output per time period (thousands of yards per month). There are 200 identical firms in thismarket, each typical firm has a marginal cost of production MC 100+ 1000g where q is the output of atypical firm. Derive the market supply curve Determine the market equilibrium price and quantity.Determine the producer surplus and consumer surplus. How much net benefit this market generates forthe society? Determine how much the typical firm will produce per month at the equilibrium price

Part 2: Approach to solving the questionTo derive the market supply curve, we need to understand how…

Answered: The market demand for a type of carpet…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Based on Zangwill (1992). Murray Manufacturing runs a day shift and a night shift. Regardless of the number of units produced, the only production cost during a shift is a setup cost. It costs $8000 to run the day shift and $4500 to run the night shift. Demand for the next two days is as follows: day 1, 2000; night 1, 3000; day 2, 2000; night 2, 3000. It costs $1 per unit to hold a unit in inventory for a shift. a. Determine a production schedule that minimizes the sum of setup and inventory costs. All demand must be met on time. (Note: Not all shifts have to be run.) b. After listening to a seminar on the virtues of the Japanese theory of production, Murray has cut the setup cost of its day shift to $1000 per shift and the setup cost of its night shift to $3500 per shift. Now determine a production schedule that minimizes the sum of setup and inventory costs. All demand must be met on time. Show that the decrease in setup costs has actually raised the average inventory level. Is this…
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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 3g. Market demand function is given by Q=1200-70P Find the equilibrium quantity of a type A firm and its profit, respectively. Oq=4, profit-$4 Oq=2, profit=$4 q-3, profit=$6 q=5, profit-$23
The nearby graph represents the demand curve of an individual consumer of a greeting card's website. The firm has market power and can prevent resale. It practices block pricing by offering $0.25 per card for the first order of 100 cards, but will lower the price to $0.20 each for the next 25 cards, and $0.10 each for the next 50 cards (for a total of 175 cards). What is the producer surplus of the firm when it can sell 175 cards? Price ($/greeting card) B $0.25 0.20 A C 0.10 E 0.05 MC MR D 100 125 175 Quantity of cards $26.25 $2.50 $29.375 $20
consider a market with a large number of firms, an upward sloping supply curve S0, and a downward sloping demand curve D0. We will start with the assumption that the market is perfectly competitive; hence, the supply curve S0 is the sum of the marginal cost curves of all the firms. Assume the market is perfectly competitive. Indicate the original competitive equilibrium price P0, equilibrium quantity Q0, the resulting Consumer Surplus CS0, the resulting Producer Surplus PS0, and the “socially optimal” output (the output the Benevolent Dictator would choose) QSO on your graph. Graphically indicate the size of Dead-Weight Loss DWL0 if there is such a loss. Question - Now suppose that scientists discover that this particular product has a significant Positive Externality. The Demand curve is a depiction of marginal private benefit (MPB). However, the existence of the positive externality means that for every given output level, Marginal Social Benefit (MSB) is higher than Marginal…
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A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at $1,000 per diamond, and the demand for diamonds is described by the following schedule: Price ($) Quantity (diamonds) 8000 5000 7000 6000 6000 7000 5000 8000 4000 9000 3000 10000 2000 11000 1000 12000 a) If there were many suppliers of diamonds, what would be the price and quantity? b) If there were only one supplier of diamonds, what would be the price and quantity? c) If Russia and South Africa formed a cartel, what would be the price and quantity? If the countries split the market evenly, what would be South Africa’s production and profit? What would happen to South Africa’s profit if it increased its production by 1,000 while Russia stuck to the cartel agreement? d) Use your answers to part (c) to explain why cartel agreements are often not successful.
Note:hand written solution should be avoided.
Each of the 10 firms in a competitive market has a cost function of C=5+ q? The market demand function is Q = 420 -p. Determine the equilibrium price, quantity per firm, and market quantity The equilibrium price is $ (Enter your response as a whole number) The quantity per firm is q=units. (Enter your response as a whole number) The market quantity is Q=units. (Enter your response as a whole number)

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