==There are n firms in a competitive industry. The market demand functionis given by p 50 2Q. A firm's cost function is C (q) = q². The total surplusis given by S₁ 502 Suppose the government imposes a per-unit tax t > 0 onconsumers. That is, for each unit of goods purchased, the consumer pays p +t. Asa result, the market demand function becomes p+t = 50 - 2Q. The tax goes to thegovernment and firms only receive p for each unit of output sold. So the profit of afirm is pq q². Derive the total surplus, denoted by S₂. Is S₂ > S₁? Explain theintuition of your answer.

Let's derive the total surplus step by step, first without the tax (S1), and then with the tax…

Answered: = = There are n firms in a competitive…

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

A firm faces the following linear inverse demand for its product P = 60 - 2Q. a)Find the firm's total revenue function TR (Q).b)Find the expression for the firm's marginal revenue.c)Assumingthat the marginal cost of production is given by MC=8. What will be the equilibrium output and price
Suppose that the inverse demand for a upstream firm is P = 150 - Q. It also produces a critical input with costs of CU(Qd) = 5(Qd)2. The downstream firm's cost is Cd(Q) = 10Q. When there is no external market for the downstream firm's critical input, the marginal revenue for the upstream firm is: A. MRd(Q) = 140 2Q. B. MRd(Q) = 150 - Q. C. MRd(Q) = 140 - Q. D. MRd(Q) = 150 - Q. E. None of the above
If the total revenue function of a good is given by TR= 900Q- 3Q² Find Marginal Revenue at Q=20 Estimate the change in the value of TR due to a 2 unit increase in Q.
Suppose we are studying the long-run competitive market for robots, the market demand for robots isgiven byD(p)=24p. All the firms are identical with the following cost curveC(y)=y22+8. a)What is the long-run competitive market equilibrium? Rick is a single consumer in the market; his consumption of robots is given byDi(p)=Mp, whereMis his fixed income. Rick is also a government regulator for the robot market; he decides if themarket is competitive or a monopoly.Morty is a firm in the market (he faces the same cost curve as everyone else:C(y)=y22+8). Mortywould like to operate as a monopolist (instead of a firm in a competitive market). b)How much would Morty have to pay/compensate Rick in order for Rick to allow Morty to operateas a monopolist (The market demand curve is the same as part a))? c)Suppose instead this was an oligopoly market with 2 firms engaged in Bertrand competition; bothfirms face the same cost curve and demand curve as part a). How much…
The market demand for a type of good has been estimated as: P= 40 - 0.25Q, where Pis price ($) and Q is rate of sales per month. The long run market supply is expressed as: P 10.0 + 0.05Q. %3D There is a firm operating in this market that is characterized by following long run marginal cost: MC = - 20.0 + 5.0q What would be the return to firm specific advantage for this firm? 66.24 44.15 82.5 33.72 O 14.75 O 54.25 O 62.17 Next
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!
If in a pure competitive market the supply function is defined by Q=0.5P-0.5 whilst the demand function is represented by P+Q2-25=0.determine the magnitude of the consumer's surplus and producer's surplus
Suppose Bedox is a patent drug for man’s beauty. Her manufacturer faces a market demand for Bedox of Q = 1,000 – 0.2P. She has a cost function of C = 300,000 – 1,000Q + 10Q^2.Suppose the government considers this “unfair to consumers” by allowing Bedox to charge such a high price. As such, the government has decided to impose a lump-sum tax of $200,000 on Bedox. Explain whether this policy can help alleviate the “unfairness to consumers”.
Determine the profit-maximizing LOADING... prices when a firm faces two markets where the inverse demand curves are Market A: pA=100−2QA, where demand is less elastic, and Market B: pB=60−1QB, where demand is more elastic, and Marginal Cost=m=20 for both markets. Part 2 For Market A: pA=$enter your response here. (Round your response to two decimal places.) Part 3 For Market B: pB=$enter your response here. (Round your response to two decimal places.)
Under perfect competition, if the market demand function is Qdx = 120-20Px and the market supply function is Qsx = 20Px, what units are the total consumer surplus and producer surplus?
Imagine a firm with a marginal abatement cost ( MAC) function equal to: MAC = 70 - 10E. The government introduces a cap-and-trade policy and grandfathers the firm 5 permits initially. Assuming the market price of permits is $10, the firm will spend a total of $___ in order to buy permits. (Note: your answer can be positive or negative; if it is positive, the firm buys permits and your answer represents the firm's total expenditures on permits; if it is negative, the firm sells permits and your answer represents the firm's total revenues from selling permits).
"Vitamin Strong" has the monopoly on the production of vitamin C. It faces geographically separated markets, denoted A and B. The demand on these two markets are respectively QA = 1-PA and QB = 0.5 - PB. The transport and production costs are zero for simplicity. Suppose that the firm chooses to set a local prices for each of the two markets. In this case the optimal prices are PA = and PB=... and would supply A-- and QB=_______ (All numeric ==== answers rounded to two decimals) Blank # 1 Blank # 2 Blank # 3 Blank # 4 N N N A

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS