17.A perfectly competitive firm has the following total cost function: TC = 4,500 + 2q + .0005q2 where TC is total cost in dollars and q is the quantity of output produced. a. Assume this perfectly competitive market consists of 800 firms with cost structures identical to the one above. What is the equation for the market supply curve? Assume the market demand curve is: Qd = 5,600,000 – 400,000P where Qd is the quantity demanded in the market and P is the commodity’s price in dollars. b. What is the market’s equilibrium price? c. Assuming the market is in equilibrium, using marginal revenue and marginal cost determine the firm’s profit-maximizing quantity of output? What does the profit-maximizing firm’s total economic profit equal? Assume the total cost function above: TC = 4,500 + 2q + .0005q2 is associated with the short-run total cost function that corresponds to the minimum point on the long-run average total cost curve and this is a constant cost industry. d. What would the long-run equilibrium price equal? e. Assuming the firm and market are in the long-run equilibrium, what quantity of output would the firm produce? f. How many firms will there be in this market when it is in long-run equilibrium?
17.
A
TC = 4,500 + 2q + .0005q2
where TC is total cost in dollars and q is the quantity of output produced.
a. Assume this perfectly competitive market consists of 800 firms with cost structures identical to the one above. What is the equation for the market supply curve?
Assume the market demand curve is:
Qd = 5,600,000 – 400,000P
where Qd is the quantity demanded in the market and P is the commodity’s
b. What is the
c. Assuming the market is in equilibrium, using marginal revenue and marginal cost determine the firm’s profit-maximizing quantity of output? What does the profit-maximizing firm’s total economic profit equal?
Assume the total cost function above:
TC = 4,500 + 2q + .0005q2
is associated with the short-run total cost function that corresponds to the minimum point on the long-run
d. What would the long-run equilibrium price equal?
e. Assuming the firm and market are in the long-run
f. How many firms will there be in this market when it is in long-run equilibrium?
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