.. Consider a two-product firm under pure competition. With pure competition, the prices of both commodities will be taken as exogenous, denoted by P₁ and P₂. The production cost is C (Q1, Q2) = Q +3Q²/ where Q₁ and Q2 represent the output levels of product 1 and product 2. (c) P₂. Find the output levels, Q₁ and Q₂, that satisfy (b) as a function of P₁ and

.. Consider a two-product firm under pure competition. With pure competition, the prices of both commodities will be taken as exogenous, denoted by P₁ and P₂. The production cost is C (Q1, Q2) = Q +3Q²/ where Q₁ and Q2 represent the output levels of product 1 and product 2. (c) P₂. Find the output levels, Q₁ and Q₂, that satisfy (b) as a function of P₁ and

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter10: Prices, Output, And Strategy: Pure And Monopolistic Competition

Section: Chapter Questions

Problem 9E

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Start from a market with perfect competition. For a representative producer, the long-term marginal cost is given by LMC=9Q2−20Q+50LMC=9Q2−20Q+50 and the long-term total cost function is LTC=3Q3−10Q2+50QLTC=3Q3−10Q2+50Q Assume that the price on the market right now is SEK 50. a) How much profit or loss does the producer make in the initial situation? b) Describe in detail what will happen in the market and why c) What will the equilibrium price be? d) how much will our producer produce at market equilibrium?
Suppose Glen’s Grinders, LLC is a retail outlet that sells meat grinders for household use and operates in a perfectly competitive market where there is a total of 10 firms in this market including Glen’s Grinders. Basically, all the firms in this competitive market have technologies (production and cost conditions) that are the same as Glen’s. Suppose Glen’s total cost function is given by: C(q) =100 + 25q + q^2 a. Calculate Glen’s optimal output level and profits if the monthly market inverse demand for units of the product is stable and given by: P= 250 - Q b. If Glen is typical of the firms in this industry (same as the other 9), calculate the long-run equilibrium output, price, and profit level that will ultimately prevail in this industry.
A price-taking firm in a competitive industry of a good that is continuously divisible (like sand) has a total cost function TC(Q) = 3.5Q^2 + 100Q + 500. The market price for the good is p = $240. a: Carefully write out this firm’s profit maximization problem, using the particulars of thisproblem. b: Give the marginal condition (equation) that characterizes the solution to this problem. Solvethis condition for the firm’s optimal quantity Q*. c: Calculate the firm’s maximized profit. d: On a graph with quantity on the horizontal axis, neatly plot the marginal revenue curve andmarginal cost curve. Show Q* on your graph. e: Label areas on your graph using a, b, c, etc. and indicate the areas that correspond to totalrevenue and variable cost.
total cost function for this market is TC = 500 + 10Q2 1. What are the profit-maximizing quantity, price, and profit for this market? 2. If there are two firms Atlas and Bowden in this market with the same earlier total cost function and they engage in Cournot competition, what is each firm's equilibrium quantity, price, and profit? [NB: round quantities to nearest integer to find equilibrium quantity, price, and profit] Is this a long run equilibrium? Why or why not?
Assume a competitive industry is initially at its long-run equilibrium, given the inverse market demand and supply functions:P=25000−0.2Qd and p=5000+0.3QsIf all current firms in this market have identical cost structures and produce 50 units at their break-even point:a) How many firms operate in this market at this point? b) What is the profit maximizing quantity produced by each competitive fir
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4. Assess which of the following is true and which is false.A firm’s profit equation is given by π = -100 + 160Q – 20Q2. Therefore,a) The firm’s fixed cost is 100.b) The firm’s fixed cost is 40 and variable cost is 20.c) Marginal profit is Mπ = 160 – 20Q.d) The firm’s profit-maximizing output is Q = 4.e) Marginal profit is Mπ = 160 – 40Q and it is positive for quantities that are lower than theprofit-maximizing quantity.
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