Figure 9.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $40 and the fir s currently producing the profit maximizing output level, the firm's profit is: O A. $7,200. O B. $9,000. OC. $27,000. $36.000
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- Firms ill a perfectly competitive market are said to be price takers that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?If new technology in a perfectly competitive market brings about a substantial reduction in costs of production, how will this affect the market?Suppose that each firm in a competitive industry has the following costs: Total cost: TC= 50 + 0.5Q^2The market demand curve for this product is: Qd= 120 − PThere are 9 firms in the market.e) What is the equilibrium price and quantity for this market in the short run? In this equilibrium, how much does each firm produce? Calculate each firm’s profit.f) In the long run with free entry and exit, what is the equilibrium price and quantity in thid market. Is there incentive for firms to enter or exit? h) In this long-run equilibrium, how much does each firm produce? How many firms are in the market?
- Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + 0.5Q^2The market demand curve for this product is: Qd= 120 −PThere are 9 firms in the market.a) What are each firm’s: fixed cost, variable cost, marginal cost, and average total cost? Graph the average-total-cost curve and the marginal-cost curve.b) Give the equation for each firm’s supply curve.the average-total-cost curve at its minimum? What is marginal cost and average totalc) Give the equation for the market supply curve for the short run in which the numbercost at that quantity?Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + 1/2q2 Marginal cost: MC = q Where q is an individual firm’s quantity produced. The market demand curve for the product is: Demand: QD = 120 – P Where P is the price and Q is the total quantity of the good. Currently there are 9 firms in the market. What is each firm’s fixed cost? What is its variable cost? Give the equation for average total cost. Graph the average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is the average-total-cost curve at its minimum? What is the marginal cost and average total cost at that quantity? Give the equation for each firm’s supply curve. Give the equation for the market supply curve for the short run in which the number of firms is fixed. What is the equilibrium price and quantity for the market in the short run? In this equilibrium, how much does each firm produce? Calculate the firm’s profit and loss. Do firms have…An industry currently has 100 firms, each of whichhas fixed cost of $16 and average variable cost asfollows:Quantity Average Variable Cost1 $12 23 34 45 56 6a. Compute a firm’s marginal cost and average totalcost for each quantity from 1 to 6.b. The equilibrium price is currently $10. How muchdoes each firm produce? What is the total quantitysupplied in the market?c. In the long run, firms can enter and exit themarket, and all entrants have the same costs asabove. As this market makes the transition to itslong-run equilibrium, will the price rise or fall?Will the quantity demanded rise or fall? Will thequantity supplied by each firm rise or fall? Explainyour answers.d. Graph the long-run supply curve for this market,with specific numbers on the axes as relevant.
- The market for fertilizer is perfectly competitive.Firms in the market are producing output but arecurrently incurring economic losses.a. How does the price of fertilizer compare to theaverage total cost, the average variable cost, andthe marginal cost of producing fertilizer?b. Draw two graphs, side by side, illustrating thepresent situation for the typical firm and for themarket.c. Assuming there is no change in either demand orthe firms’ cost curves, explain what will happenin the long run to the price of fertilizer, marginalcost, average total cost, the quantity supplied byeach firm, and the total quantity supplied to themarket.The table below shows the average cost (AC) for a purely competitive market. The average revenue (AR) is constant at RM5 per unit and the firm’s total fixed cost (TFC) is RM4. If the average revenue falls to RM3 per unit, calculate the firm’s new profit or loss at the equilibrium. Based on your answer, should the firm continue or stop the production? Justify. Output (Units) Total Revenue (RM) Average Cost (RM) Total Cost (RM) Marginal Cost (RM) Marginal Revenue (RM) 1 8.0 2 5.5 3 4.0 4 3.5 5 3.8 6 4.5 7 6.0Suppose that each firm in a competitive industry has the following costs: Totalcost:TC=50+1/2q2 Marginalcost:MC=q where q is an individual firm's quantity produced. The market demand curve for this product is Demand:QD=120−P where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market.a. What is each firm's fixed cost? What is its variable cost? Give the equation for average total cost.b. Graph average-total-cost curve and the marginal-cost curve for qfrom 5 to 15. Atwhat quantity is average-total-cost curve at its minimum? What is marginal cost and averagetotal cost at that quantity?c. Give the equation for each firm's supply curve.d. Give the equation for the market supply curve for the short run in which the number of firms is fixed.e. What is the equilibrium price and quantity for this market in the short run?f. In this equilibrium, how much does each firm produce? Calculate each firm's profit or loss. Is there incentive for firms to…
- A perfectly competitive market has a demand curve given by the equation Q = 2000 − 2p where Q is the market quantity demanded and P the price per unit. Each firm in the market has the total cost given by TC = 1000 + 100q + 10q' and the marginal cost MC = 100 + 20q If the current market price is $400, 1. Calculate the market quantity , profit and quantity maximizing profit for each firm and Graph your results. OK 2. Suppose that the market is in the long run.How much profit will each firm earn and what will be the market price and What is the market quantity and price ? 3 How many firms operate in this marketPlease no written by hand solutions 7If SRTC 200+2q+4qwhere q is output, the firm's short-run supply function is a.P = 2 + 8q for P >= 2 and zero otherwise b. q = 0 P < 2; 0.125P - 0.25 P >= 2 c.P = 2 + 8a for p > 0 and zero otherwise. d.q = 0 P < 0; 0.125P - 0.25 P >= 0 8 Each firm in a perfectly competitive market has long-run average total cost represented as ATC+100/q. Long-run marginal cost is MC = 200q - 10 The market demand is O^ prime =215 dot 0 * 5P . At the long-run equilibrium price, how many firms are in the market? a= 500 b. n = 1000 c. n = 1200 d.n-2000 e.n = 2400A firm’s costs are given in the following table. q TC TFC TVC AVC ATC MC 0 RM50 1 70 2 80 3 90 4 110 5 140 6 175 7 220 8 280 9 360 10 450 1.1) Complete the table. 1.2) Draw a graph for each AVC, ATC and MC on one graph. 1.3) Suppose market price is RM20. How much will the firm produce in the short run? How much are total profits? 1.4) Suppose market price is RM60. How much will the firm produce in the short run? How much are total profits?