What is the type of market that Lin operates and what determines the price of the cookies and marginal revenue of Lin.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 12, Problem 1SPA

To determine

What is the type of market that Lin operates and what determines the price of the cookies and marginal revenue of Lin.

Expert Solution & Answer

Explanation of Solution

The market where there are many buyers and sellers of the uniform commodities and each one with the complete market knowledge and complete freedom of entry and exit into the market is known as the perfect competition. Here in the case of Lin, he operates in a market where there are many producers and all produce the very same commodity, which is here, the cookie. Anyone can enter or exit from the market at any time, which means there are no barriers to entry and exit from the market. These indicates that the market that Lin operates has the characteristics of perfectly competitive market.

The price is determined at the point of equilibrium between the market demand curve and the market supply curve. The market demand curve is the summation of all the individual demand curves of the market whereas the market supply curve is the summation of the individual supply curves in the market. Thus, the price level of the market is determined at the intersection of the market demand and supply curves. It is known as the equilibrium price because at this price, there will be no excess or shortage of supply or demand in the market.

The perfectly competitive market has a condition that determines the efficiency maximizing level and it is the level at which the price equals marginal cost equals marginal revenue. Thus, MR equals MC equals Price under perfect competition. The marginal revenue is the additional revenue generated through the sale of an additional unit of commodity in the market. Since the MR = MC = P under perfect competition, the marginal revenue of Lin is determined by the price level in the market.

Economics Concept Introduction

Market: Market is a place where the prospective buyers and sellers interact with each other and the exchange of goods and services takes place between the seller and the buyer at a mutually agreed price level.

Perfect competition: Perfect competition is a market condition where there are a large number of buyers and sellers in the market, perfect knowledge of the market to the buyers and sellers, uniform commodities, and there is freedom of entry and exit in the market.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Problem 2. If the consumer preference can be represented by a CES function with δ = 0.5, i.e. u(x, y) = x0.5 + y0.5. Let the prices and income be (px, py, w). 1. Set up the Lagrangian expression.2. Take the first-order conditions.3. Substitute into budget constraint to derive the optimal consumption bundles.

1. A town relies on four different sources for its non-drinking water needs: dam water, reclaimed water, rain water, and desalinated water. The different sources carry different risks and costs. For instance, desalinated water is fully reliable due to abundant sea water, but it is more expensive than other options. Reclaimed water also has relatively lower risk than rain or dam water since a certain amount can be obtained, even during the dry. season, by the treatment of daily generated waste water. Using any of the four options requires an investment in that resource. The return on a particular water source is defined as the amount of water generated by the source per dollar of investment in it. The expected returns and standard deviations of those returns for the four water sources are described in the following table: Water resource Expected return St. Deviation Dam water 2.7481 0.2732 Reclaimed water 1.6005 0.0330 Rain water 0.5477 0.2865 Desalinated water 0.3277 0.0000 Higher…

1. Imagine a society that produces military goods and consumer goods, which we'll call "guns" and "butter." a. Draw a production possibilities frontier for guns and butter. Using the concept of opportunity cost, explain why it most likely has a bowed-out shape. b. Show a point that is impossible for the economy to achieve. Show a point that is feasible but inefficient. c. Imagine that the society has two political parties, called the Hawks (who want a strong military) and the Doves (who want a smaller military). Show a point on your production possibilities frontier that the Hawks might choose and a point the Doves might choose. d. Imagine that an aggressive neighboring country reduces the size of its military. As a result, both the Hawks and the Doves reduce their desired production of guns by the same amount. Which party would get the bigger "peace dividend," measured by the increase in butter production? Explain.

Answer 2

Question

Chapter 12, Problem 1SPA

To determine

What is the type of market that Lin operates and what determines the price of the cookies and marginal revenue of Lin.

Expert Solution & Answer

Explanation of Solution

The market where there are many buyers and sellers of the uniform commodities and each one with the complete market knowledge and complete freedom of entry and exit into the market is known as the perfect competition. Here in the case of Lin, he operates in a market where there are many producers and all produce the very same commodity, which is here, the cookie. Anyone can enter or exit from the market at any time, which means there are no barriers to entry and exit from the market. These indicates that the market that Lin operates has the characteristics of perfectly competitive market.

The price is determined at the point of equilibrium between the market demand curve and the market supply curve. The market demand curve is the summation of all the individual demand curves of the market whereas the market supply curve is the summation of the individual supply curves in the market. Thus, the price level of the market is determined at the intersection of the market demand and supply curves. It is known as the equilibrium price because at this price, there will be no excess or shortage of supply or demand in the market.

The perfectly competitive market has a condition that determines the efficiency maximizing level and it is the level at which the price equals marginal cost equals marginal revenue. Thus, MR equals MC equals Price under perfect competition. The marginal revenue is the additional revenue generated through the sale of an additional unit of commodity in the market. Since the MR = MC = P under perfect competition, the marginal revenue of Lin is determined by the price level in the market.

Economics Concept Introduction

Market: Market is a place where the prospective buyers and sellers interact with each other and the exchange of goods and services takes place between the seller and the buyer at a mutually agreed price level.

Perfect competition: Perfect competition is a market condition where there are a large number of buyers and sellers in the market, perfect knowledge of the market to the buyers and sellers, uniform commodities, and there is freedom of entry and exit in the market.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 12, Problem 1SPA

To determine

What is the type of market that Lin operates and what determines the price of the cookies and marginal revenue of Lin.

Expert Solution & Answer

Explanation of Solution

The market where there are many buyers and sellers of the uniform commodities and each one with the complete market knowledge and complete freedom of entry and exit into the market is known as the perfect competition. Here in the case of Lin, he operates in a market where there are many producers and all produce the very same commodity, which is here, the cookie. Anyone can enter or exit from the market at any time, which means there are no barriers to entry and exit from the market. These indicates that the market that Lin operates has the characteristics of perfectly competitive market.

The price is determined at the point of equilibrium between the market demand curve and the market supply curve. The market demand curve is the summation of all the individual demand curves of the market whereas the market supply curve is the summation of the individual supply curves in the market. Thus, the price level of the market is determined at the intersection of the market demand and supply curves. It is known as the equilibrium price because at this price, there will be no excess or shortage of supply or demand in the market.

The perfectly competitive market has a condition that determines the efficiency maximizing level and it is the level at which the price equals marginal cost equals marginal revenue. Thus, MR equals MC equals Price under perfect competition. The marginal revenue is the additional revenue generated through the sale of an additional unit of commodity in the market. Since the MR = MC = P under perfect competition, the marginal revenue of Lin is determined by the price level in the market.

Economics Concept Introduction

Market: Market is a place where the prospective buyers and sellers interact with each other and the exchange of goods and services takes place between the seller and the buyer at a mutually agreed price level.

Perfect competition: Perfect competition is a market condition where there are a large number of buyers and sellers in the market, perfect knowledge of the market to the buyers and sellers, uniform commodities, and there is freedom of entry and exit in the market.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 12, Problem 1SPA

To determine

What is the type of market that Lin operates and what determines the price of the cookies and marginal revenue of Lin.

Expert Solution & Answer

Explanation of Solution

The market where there are many buyers and sellers of the uniform commodities and each one with the complete market knowledge and complete freedom of entry and exit into the market is known as the perfect competition. Here in the case of Lin, he operates in a market where there are many producers and all produce the very same commodity, which is here, the cookie. Anyone can enter or exit from the market at any time, which means there are no barriers to entry and exit from the market. These indicates that the market that Lin operates has the characteristics of perfectly competitive market.

The price is determined at the point of equilibrium between the market demand curve and the market supply curve. The market demand curve is the summation of all the individual demand curves of the market whereas the market supply curve is the summation of the individual supply curves in the market. Thus, the price level of the market is determined at the intersection of the market demand and supply curves. It is known as the equilibrium price because at this price, there will be no excess or shortage of supply or demand in the market.

The perfectly competitive market has a condition that determines the efficiency maximizing level and it is the level at which the price equals marginal cost equals marginal revenue. Thus, MR equals MC equals Price under perfect competition. The marginal revenue is the additional revenue generated through the sale of an additional unit of commodity in the market. Since the MR = MC = P under perfect competition, the marginal revenue of Lin is determined by the price level in the market.

Economics Concept Introduction

Market: Market is a place where the prospective buyers and sellers interact with each other and the exchange of goods and services takes place between the seller and the buyer at a mutually agreed price level.

Perfect competition: Perfect competition is a market condition where there are a large number of buyers and sellers in the market, perfect knowledge of the market to the buyers and sellers, uniform commodities, and there is freedom of entry and exit in the market.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 12, Problem 1SPA

To determine

What is the type of market that Lin operates and what determines the price of the cookies and marginal revenue of Lin.

Expert Solution & Answer

Explanation of Solution

The market where there are many buyers and sellers of the uniform commodities and each one with the complete market knowledge and complete freedom of entry and exit into the market is known as the perfect competition. Here in the case of Lin, he operates in a market where there are many producers and all produce the very same commodity, which is here, the cookie. Anyone can enter or exit from the market at any time, which means there are no barriers to entry and exit from the market. These indicates that the market that Lin operates has the characteristics of perfectly competitive market.

The price is determined at the point of equilibrium between the market demand curve and the market supply curve. The market demand curve is the summation of all the individual demand curves of the market whereas the market supply curve is the summation of the individual supply curves in the market. Thus, the price level of the market is determined at the intersection of the market demand and supply curves. It is known as the equilibrium price because at this price, there will be no excess or shortage of supply or demand in the market.

The perfectly competitive market has a condition that determines the efficiency maximizing level and it is the level at which the price equals marginal cost equals marginal revenue. Thus, MR equals MC equals Price under perfect competition. The marginal revenue is the additional revenue generated through the sale of an additional unit of commodity in the market. Since the MR = MC = P under perfect competition, the marginal revenue of Lin is determined by the price level in the market.

Economics Concept Introduction

Market: Market is a place where the prospective buyers and sellers interact with each other and the exchange of goods and services takes place between the seller and the buyer at a mutually agreed price level.

Perfect competition: Perfect competition is a market condition where there are a large number of buyers and sellers in the market, perfect knowledge of the market to the buyers and sellers, uniform commodities, and there is freedom of entry and exit in the market.

Answer 6

Chapter 12, Problem 1SPA

To determine

What is the type of market that Lin operates and what determines the price of the cookies and marginal revenue of Lin.

Expert Solution & Answer

Explanation of Solution

The market where there are many buyers and sellers of the uniform commodities and each one with the complete market knowledge and complete freedom of entry and exit into the market is known as the perfect competition. Here in the case of Lin, he operates in a market where there are many producers and all produce the very same commodity, which is here, the cookie. Anyone can enter or exit from the market at any time, which means there are no barriers to entry and exit from the market. These indicates that the market that Lin operates has the characteristics of perfectly competitive market.

The price is determined at the point of equilibrium between the market demand curve and the market supply curve. The market demand curve is the summation of all the individual demand curves of the market whereas the market supply curve is the summation of the individual supply curves in the market. Thus, the price level of the market is determined at the intersection of the market demand and supply curves. It is known as the equilibrium price because at this price, there will be no excess or shortage of supply or demand in the market.

The perfectly competitive market has a condition that determines the efficiency maximizing level and it is the level at which the price equals marginal cost equals marginal revenue. Thus, MR equals MC equals Price under perfect competition. The marginal revenue is the additional revenue generated through the sale of an additional unit of commodity in the market. Since the MR = MC = P under perfect competition, the marginal revenue of Lin is determined by the price level in the market.

Economics Concept Introduction

Market: Market is a place where the prospective buyers and sellers interact with each other and the exchange of goods and services takes place between the seller and the buyer at a mutually agreed price level.

Perfect competition: Perfect competition is a market condition where there are a large number of buyers and sellers in the market, perfect knowledge of the market to the buyers and sellers, uniform commodities, and there is freedom of entry and exit in the market.

Answer 7

Chapter 12, Problem 1SPA

To determine

What is the type of market that Lin operates and what determines the price of the cookies and marginal revenue of Lin.

Answer 8

Expert Solution & Answer

Explanation of Solution

The market where there are many buyers and sellers of the uniform commodities and each one with the complete market knowledge and complete freedom of entry and exit into the market is known as the perfect competition. Here in the case of Lin, he operates in a market where there are many producers and all produce the very same commodity, which is here, the cookie. Anyone can enter or exit from the market at any time, which means there are no barriers to entry and exit from the market. These indicates that the market that Lin operates has the characteristics of perfectly competitive market.

The price is determined at the point of equilibrium between the market demand curve and the market supply curve. The market demand curve is the summation of all the individual demand curves of the market whereas the market supply curve is the summation of the individual supply curves in the market. Thus, the price level of the market is determined at the intersection of the market demand and supply curves. It is known as the equilibrium price because at this price, there will be no excess or shortage of supply or demand in the market.

The perfectly competitive market has a condition that determines the efficiency maximizing level and it is the level at which the price equals marginal cost equals marginal revenue. Thus, MR equals MC equals Price under perfect competition. The marginal revenue is the additional revenue generated through the sale of an additional unit of commodity in the market. Since the MR = MC = P under perfect competition, the marginal revenue of Lin is determined by the price level in the market.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Market: Market is a place where the prospective buyers and sellers interact with each other and the exchange of goods and services takes place between the seller and the buyer at a mutually agreed price level.

Perfect competition: Perfect competition is a market condition where there are a large number of buyers and sellers in the market, perfect knowledge of the market to the buyers and sellers, uniform commodities, and there is freedom of entry and exit in the market.

Answer 12

Ch. 12.1 - Prob. 1RQ Ch. 12.1 - Prob. 2RQ Ch. 12.1 - Prob. 3RQ Ch. 12.1 - Prob. 4RQ Ch. 12.2 - Prob. 1RQ Ch. 12.2 - Prob. 2RQ Ch. 12.2 - Prob. 3RQ Ch. 12.3 - Prob. 1RQ Ch. 12.3 - Prob. 2RQ Ch. 12.3 - Prob. 3RQ

What is the type of market that Lin operates and what determines the price of the cookies and marginal revenue of Lin.

What is the type of market that Lin operates and what determines the price of the cookies and marginal revenue of Lin.

Explanation of Solution

Want to see more full solutions like this?

Chapter 12 Solutions