Consider a perfectly competitive market for a good in which the market demand is D = 100 the price per unit. The supply of a perfectly competitive firm is S; =, where S; denotes the quantity supplied by firm i=1,..,n. Suppose that each firm has a minimum average cost of $4. Given that all firms are identical then market supply is defined as S = nSj. The number of firms that would enter into the market in the long run is n= p where D represents the quantity demanded in the market and p %3D none of the other answers are correct. 96 50 48 52
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- The marginal and average total cost curves for barbers in an area are cosntant at $12.00/haircut. The daily demand curve for haircuts in the area is given by: P = 22 - 0.001Qd where P is the price in dollars per haircut and Qd is the daily quantity demanded in number of haircuts. Haircuts are provided in a perfectly competitive market and each barber can provide exactly 25 haircuts daily. Suppose that the government decides to limit the number of barbers to 320. Each year, barbers must obtain a government-issued license to cut hair. Based upon the previous information: a. What will be the long-run equilibrium price for a haircut given there are only 320 licensed barbers?b. How much economic profit will each licensed barber earn daily?Consider a perfectly competitive market with the market demand functionQd = 1000 − 10pThere are many small, identical firms in the market. Each firm has the marginal cost function:MC = 10 + 10qand the average total cost function:ATC = 45/q + 10 + 5q(a) Suppose the equilibrium price is currently 30 (in the short run). Determine the quantity sold by eachfirm, the market equilibrium quantity, and the number of firms there must be in the market. Hint: Onceyou know the market quantity and quantity per firm, you can back out the number of firms.(b) If entry and exit is possible in the long run, determine long-run equilibrium price, quantity sold by eachfirm, the market equilibrium quantity, and the number of firms there will beConsider a competitive market for red lentils with 100 identical farmers in Horsham Victoria, a competitive market price of $5 and the following MC for each farmer: MC = $0.05Q Also consider the following market demand function: QD a) Calculate the optimal level of production (in tonnes) for each farmer (show workings) = = 1000 - 40P b) Assuming 100 lentil farmers of equal size how many tonnes of lentils in total will be supplied in the entire market? (show all workings) c) Consider that the government now imposes a 25% tax on producers, calculate i) the new equilibrium level of output for each firm (hint - think about how this affects each farmer's marginal cost), and ii) new total supply in the entire market (show all workings)
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- A firm has a linear demand function for its product. When the price of the product isSh.220, the quantity demanded is 40 units. When the price increases to Sh.240, thequantity demanded becomes 30 units. In addition, the firm’s marginal cost function isgiven by:MC = 40q – 2q2 + 2Fixed cost = Sh.5 millionWhere q = quantity demanded, MC = marginal cost (Sh. million)Evaluate the level of output that maximizes profits.Assume a competitive firm faces a market price of $100, a cost curve of: C= 1.00g + 25g + 1,600 and a marginal cost curve of: MC = 2.00g + 25. The firm's profit maximizing output level is 37.50 units, the profit per unit is $-5.17, and total profit is: $-193.88. However, if the firm wanted to maximize the profit per unit, how much would it produce? It would produceunits. (round your answer to two decimal places) If the firm produced this output level, what woulid be the profit? Its profit would be $. (round your answer to the nearest penny)1) In a market there are 100 identical firms, where each firm has the supply function qs(P) = p/10. Draw a single firm's supply curve, draw and calculate the aggregate supply. 2) The cost function for Acme Laundry is C(q) = 10+ 10q + q², where q is tons of laundry cleaned. Assume that the market is perfectly competitive. a. What q should the firm choose to maximize its profit if the market price is p? How much does it produce if p=50? b. Assume that the government imposes a per unit tax of t =2. How much should the firm produce to maximize its after-tax profit if the market price is p? How much does it produce ifp=50? 3) An increase in the demand for video films also increases the salaries of actors and actresses. Is the long- run supply curve for films likely to be horizontal or upward sloping? Explain.
- There are 240 firms of type A and 180 firms of type B in a perfectly competitive market. On one hand, type A firm faces a fixed cost (all sunk) of $6 and average variable cost is 2q. On the other hand type B firm faces a fixed cost (all sunk) of $4 and the variable cost is 3q. Market demand function is given by Q=2400-10P. Find the equilibrium price in the market. $36 $12 O$24 $48a) Find the long run equilibrium price. Find the minimum efficient scale of the typical firm. Find the typical firm’s average cost when it operates at minimum efficient scale. In the long run, what price will prevail in this market? In words, clearly justify your answer. Suppose demand is QD = 3,200 – 100P. (b) Explain why you expect the number of firms in this market to be fifty-five. In this market, what is the short run supply function of the typical firm? What is the short run market supply function? Suppose the local government introduced a $90 licensing fee that raised the fixed cost from $160 to $250. c) Would the introduction of the licensing fee affect the short run equilibrium price or quantity? Justify your answer? Clearly explain why you expect that in the long run fewer larger firms will operate in this market. After the introduction of the licensing fee, what is the new long run equilibrium price? How many firms will survive in this market?The long-run cost function of a firm producing widgets in a competitive market is given by c(y) = {"" y² + 10 for y > 0 O for y = 0 where y is the quantity of widgets. a. Find the lowest price at which this firm will supply a positive number of widgets in the long run. What is the output of the firm at this price? b. For the price you found in part (a), if there are 1,000 identical firms operating in this market, what would be the equilibrium market demand for widgets?