True or False and explain the math In the market for widgets, there are 200 firms which each have a supply function of q@(p) = 2p - 8 and 100 firms which each have a supply function of qs(p) = p - 3. Therefore, the industry (aggregate) supply curve has a kink at P=$4 and Q=100.
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- For many decades, the Royal Mail had a legal monopoly in the U.K. Companies in thepostal business have increasing returns to scale, then constant returns to scale, andthen decreasing returns to scale. The Royal Mail’s minimum average cost is £2 at 100million deliveries and its minimum marginal cost is £1 at 75 million deliveries.The demand for postage is zero at a price of £10, and demand is 300 milliondeliveries at a price of £0. Marginal revenue is zero at a price of £10 and 150 at aprice of £0.Note: Unless otherwise stated, the numerical answers in this question do not need tobe exact but should correspond to how you have drawn your graph. (a) Draw a large graph showing the Royal Mail’s average cost curve and itsmarginal cost curve. Show how many deliveries would be made, and at whatprice, if Royal Mail operated as a monopoly. Show the Royal Mail’s profit orloss on the graph.For many decades, the Royal Mail had a legal monopoly in the U.K. Companies in thepostal business have increasing returns to scale, then constant returns to scale, andthen decreasing returns to scale. The Royal Mail’s minimum average cost is £2 at 100million deliveries and its minimum marginal cost is £1 at 75 million deliveries.The demand for postage is zero at a price of £10, and demand is 300 milliondeliveries at a price of £0. Marginal revenue is zero at a price of £10 and 150 at aprice of £0.Note: Unless otherwise stated, the numerical answers in this question do not need tobe exact but should correspond to how you have drawn your graph. (a) Draw a large graph showing the Royal Mail’s average cost curve and itsmarginal cost curve. Show how many deliveries would be made, and at whatprice, if Royal Mail operated as a monopoly. Show the Royal Mail’s profit orloss on the graph. (b) The government makes a law restricting the price of postage to £1. Show theeffect of this policy in the…For many decades, the Royal Mail had a legal monopoly in the U.K. Companies in thepostal business have increasing returns to scale, then constant returns to scale, andthen decreasing returns to scale. The Royal Mail’s minimum average cost is £2 at 100million deliveries and its minimum marginal cost is £1 at 75 million deliveries.The demand for postage is zero at a price of £10, and demand is 300 milliondeliveries at a price of £0. Marginal revenue is zero at a price of £10 and 150 at aprice of £0.Note: Unless otherwise stated, the numerical answers in this question do not need tobe exact but should correspond to how you have drawn your graph. New technology changes delivery firms’ technology. Now, the minimumaverage cost is £2 at 1 million deliveries and a minimum marginal cost of £1at 0.75 million deliveries. The government removes all price restrictions andallows free entry. Describe the long-term outcome for this market, using twographs, one at the firm-level and one at the…
- For many decades, the Royal Mail had a legal monopoly in the U.K. Companies in thepostal business have increasing returns to scale, then constant returns to scale, andthen decreasing returns to scale. The Royal Mail’s minimum average cost is £2 at 100million deliveries and its minimum marginal cost is £1 at 75 million deliveries.The demand for postage is zero at a price of £10, and demand is 300 milliondeliveries at a price of £0. Marginal revenue is zero at a price of £10 and 150 at aprice of £0.Note: Unless otherwise stated, the numerical answers in this question do not need tobe exact but should correspond to how you have drawn your graph. The government makes a law restricting the price of postage to £1. Show theeffect of this policy in the short-run in a new, large graph. The graph shouldshow the firm’s average cost, marginal cost, marginal revenue, and consumerdemand. How much postage is bought? Show on your graph if the Royal Mailis in profit or loss, and by how much.Short-run supply and long-run equilibrium Consiber the competitive market for rhodium. Assume that no matter how many firms operate in the induatry, every firm is identical and faces the same marpinal cost (MC), averapt total cost (ATC), and average variable cost (AVC ) curves plotted in the following praph. The following graph plots the market demand curve for thodium. If there were 10 firms in this market, the short-run equilibrium price of rhodium would be per pound. At that price, firms in this industry would. Therefore, in the long run, firms would the rhodium market. Because you know that competitive firms earn economic profit in the long run, you know the long-run equilibrium price must be per pound. From the graph, you can see that this means there will be firms operating in the rhodium industry in long-run equilibrium. True or False: Assuming implicit costs are positive, each of the firms operating in this industry in the long run earns positive accounting profit. True False4.5 Show that the long-run equilibrium number of firms is indeterminate when all firms in the industryshare the same constant returns-to-scale technology and face the same factor prices.4.7 Technology for producing q gives rise to the cost function c(q) = aq + bg. The market demand forqisp =a - Bq.(a) If a>0, if b < 0, and if there are J firms in the industry, what is the short-run equilibriummarket price and the output of a representative firm?b) Ifa> 0 and b <0, what is the long-run equilibrium market price and number of firms? Explain.() Ifa>0and b > 0, what is the long-un equilibrium market price and number of firms? Explain.
- Consider the competitive market for ruthenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph. COSTS (Dollars per pound), go 72 64 56 48 40 32 24 ATC 16 AVC MC- ☐ 0 4 8 12 16 20 24 28 32 36 40 QUANTITY (Thousands of pounds) The following graph plots the market demand curve for ruthenium.Consider a competitive industry with a large number of firms, all ofwhich have identical cost functions c(y) = y^2 + 1 for y > 0 and c(0) = 0. Supposethat initially the demand curve for this industry is given by D(p) = 52 − p. If there are n number of firms , what is the industry supply curve?Suppose there are only two firms in a competitive market for a good. Firm 1's marginal cost curve is given by MC = 2.5 +0.5Q and the equation of 4+Q³. What is the equation of the - firm 2's marginal cost curve is MC supply function for this market? - a) MC = 6.5 +1.5Q⁹ b) MC = 0.33Q⁹ +3 c) Q³ = 3p - 9 d) P = 6.5 +1.5Qs
- Suppose that each firm in a competitive industry has thefollowing costs: Total cost: TC=50 + 1/2q^2 Marginal cost: MC=q where q is an individual firm’s quantity produced. The marketdemand 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 curvefor q from 5 to 15. At what quantity is average total cost curve atits minimum? What us marginal cost and average total cost at thisquantity? c. Give the equation each firm’s supply curve. d. Give the equation for the market supply curve for the shortrun in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market inthe short run? f. In this equilibrium, how much does each firm produce?Calculate each firm’s profit or loss. Is there incentive for…Consider a competitive industry with a large number of firms, all ofwhich have identical cost functions c(y) = y2 + 1 for y > 0 and c(0) = 0. Supposethat initially the demand curve for this industry is given by D(p) = 52 − p.(a) What is the supply curve of an individual firm?(b) If there are n number of firms, what is the industry supply curve?(c) What is the smallest price at which the product can be sold?(d) Based on your answers to parts (a)-(c), explain in detail theequilibrium points based on the market activity with respect to the price, firmand industry.Suppose that each firm in a competitive industry has the following as the Total cost: TC=50+ ½q2 Where q is an individual firm’s quantity produced. The market demand curve for this product is Demand: Q = 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? At what quantity efficiency of scale would be achieved? Give the equation for each firm’s supply curve Give the equation for the market supply curve for the short run What is the equilibrium price and quantity for this market in the short run? In this equilibrium, how much does each firm produce? Is there incentive for firms to enter or exit? In the long run with free entry and exit, what is the equilibrium price and quantity in this market? In the long-run equilibrium, how many firms are in the market? I want the subparts 4,5,6 to be solved. Thank you