1. Explain Arrow impossibility theorem and show the voter paradox with an example Consider an industry with n identical firms in which the i firm's total cost function Coq+bgQ, where Q=+921 Derive the industry's supply function.
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- 2. Consider a market with 90 firms, each firm has a short-run total cost function as follows: TC(q) = 5q2, and a marginal cost function: MC(q) = 10q. Market demand is given by equation Qd(p) = 200 - p. a. Solve for the short-run equilibrium outcome: P*, Q* and q*. b. What is one firm's economic profit in this market? c. Consider a different market structure, where there is only one firm, interpreted as a monopolist, and then critically discuss the impact on equilibrium price and quantity. Discuss total surplus for these two types of market structures.4, Name three definitional conditions of the market model termed pure monopoly. Explain their major implications for the behavior of the firm. Briefly for managerial economics classGiven the demand and cost functions as Q=140-P and C=Q2+20Q+300 What will be the profit maximizing output and price for perfectly competitive market? What will be the profit maximizing output and price for monopoly market? What is the profit/loss for perfectly competitive market and monopoly respectively? What is the average variable cost for perfectly competitive market? Explain the concept of diminishing marginal utility? One assumption of Indifference curves is convex to the origin. What it reflects? Explain the stages of production? Ifthere is technological progress what will happen on isoquant curve? Assuming the consumer in cardinal utility approach consume a commodity X with MUx<Px, where MUx and Px are marginal utility and price of X respectively. What decision of this consumer can increase his/her total satisfaction When economies of scale is occurred? “If taxes on gasoline increase, gasoline consumption will decrease” What type of economic analysis is it? Why? If the…
- A particular item in the Picasso Paints product line costs $7 each tomanufacture. The fixed costs are $28,000. The demand function isq = -500p + 30,000 where q is the quantity the public will buy at a given price, p. 1) Write the expense function in terms of p.2) How much profit would the firm make if the price was $12?3) What is the revenue equation?Suppose a firm faces the demand curve P = 100 – Q, while its costs are given by TC = 100 + 10Q, so MC = 10. Find the profit maximizing price and quantity for this firm, if it can only charge one price. Calculate the firm’s profit. Make a diagram, and illustrate consumer surplus, producer surplus, and deadweight loss, if any. Does this analysis suggest any problems with this situation from a public policy standpoint? Does the analysis suggest any unexploited business opportunities? Note:- • Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. • Answer completely. • You will get up vote for sure.Suppose that over the short run (say the next 5 years), demand for OPEC oil is given by P = 165 – 2.5q. Here q is measured in millions of barrels a day. OPEC marginal cost per barrel is $15. What is OPEC’s optimal level of production? What is the prevailing price of oil at that level? Many experts contend that maximizing short-run profit is counterproductive for OPEC in the long run because high price reduces buyers to conserve energy and spur competition and new exploration that increases the overall supply of oil. Suppose that the demand curve just described will remain unchanged only if oil prices stabilize at $65 per barrel or below. If oil price exceeds this threshold, long run demand (over a second five year-period) will be curtailed to P = 135 – 2.5q. OPEC seeks to maximize its total profit over the next decade. What is the optimum output and price policy? (assume all values are present values)
- Example: Dominant Firm Model with Capacity The cost function of the fringe firms is TC(g) = 4g, their total capacity is K = 2 units. The dominant firm has TC(g). The market demand is (P) = 20-2P. What is the fringe supply? What is the profit maximizing price for the dominant firm? (Please specify why P = 5.5 is not in the interior).a) Given the marginal cost of a firm is MC = 8q^2 +10q +12 and MR = 50- q. Given that total cost TC = 3350 when q=10. derive expressions for both total cost and total revenue. b) given the function f(x) = (x+4)^2 + (y-2)^2 (i)find the critical points (ii)using the second derivative test, classify the critical points.. (Requires calculus). In the model of a dominant firm, assume that the fringe supply curve is given by Q = -1 + 0.2P, where P is market price and Q is output. Demand is given by Q = 11 – P.What will price and output be if there is no dominant firm? Now assume that there is a dominant firm, whose marginal cost is constant at $6. Derive the residual demand curve that it faces and calculate its profit-maximizing output and price. highest bidder, but both the winning and losing bidders must pay her their bids. So if Jones bids $1 they pay a total of $3, but Jones gets the money, leaving him with a net gain of $98 and Smith with -$1. If both bid the same amount, the $100 is split evenly between them. Assume that each of them has only two $1 bills on hand, leaving three possible bids: $0, $1 or $2. Write out the payoff matrix for this game, and then find its Nash equilibrium.
- 1) Suppose that market demand is linear, q = 70 - p. Marginal costs are constant and equal to 10. The upstream firm, which is a manufacturer, does not sell directly but through a single downstream firm, which is a retailer. The manufacturer set the wholesale price w at stage 1. At stage 2, the retailer who is assumed not to incur any costs except wholesale price (w), observes the wholesale price and sets the retail price p. Find the optimal wholesale price (w*): Find the optimal retail price (p∗): Find the quantity demanded (q∗) that corresponds to p∗: Find the manufacturer’s profit (π*M) that corresponds to p∗: Find the retailer’s profit (π∗R) that corresponds to p∗: Find the overall channel profit (Π∗ = π*M+ π*R): Next, consider a case that the integrated firm produce the product and sell directly to consumers. Suppose the market demand is q = 70 - p. Marginal costs are constant and equal to 10. Find the optimal retail price (pi): Find the quantity demanded (qi)…15. Name three definitional conditions of the market model termed monopolistic competition. Explain their major implications for the behavior of the firm. Briefly for managerial economics classSuppose that the firm in a competitive market faces the following revenues and cost: Quantity Total Revenue Total Cost 0 $0 3 1 $7 5 2 14 8 3 21 12 4 28 17 5 35 23 6 42 30 7 49 38 In order to maximize profits, the firm will produce__ a. 6 units of output because marginal revenue equals marginal cost. b. 8 units of output because marginal revenue equals marginal cost. c. 4 units of output because marginal revenue exceeds marginal cost. d. 1 unit of output because marginal cost is maximized.