3. Suppose the doll company American Girl has an inverse demand curve of P = 150 - 0.25Q, where Q measures the quantity of dolls per day and P is the price per doll. There production function equals Q = LO.5KO.5, they pay wages of 35 and they pay capital rates of 140. What is their daily long-run profit at the profit-maximizing output level?

3. Suppose the doll company American Girl has an inverse demand curve of P = 150 - 0.25Q, where Q measures the quantity of dolls per day and P is the price per doll. There production function equals Q = LO.5KO.5, they pay wages of 35 and they pay capital rates of 140. What is their daily long-run profit at the profit-maximizing output level?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 31P: Return to Figure 9.2. Suppose P0 is 10 and P1 is 11. Suppose a new firm with the same LRAC curve as...

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Return to Figure 9.2. Suppose P0 is 10 and P1 is 11. Suppose a new firm with the same LRAC curve as the incumbent tries to bleak into the market by selling 4,000 units of output. Estimate from the graph what the new firms average cost of producing output would be. If the incumbent continues. to produce 6,000 units, how much output would the two films supply to the market? Estimate what would happen to the market price as a result of the supply of both the incumbent firm and the new entrant. Approximately how much profit would each firm earn? Figure 9.2 Economics of Scale and Natural Monoploy
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Suppose that a perfectly competitive firm faces a market price of $7 per unit, and at this price the upward-sloping portion of the firm's marginal cost curve crosses its marginal revenue curveat an outpuut level of 1,400 units. If the firsm produces 1,400 units, it's average variable costs equal $6.50 per unit, and its average fixed costs equal $0.80 per unit. What is the firm's maximizing (or loss-minimizing output level? What is the amount of it's economic profits (or losses) at this output level?
1. A firm in a perfectly competitive industry has fixed costs of FC = 15, marginal costsof MC = 5 + 14q, and average variable costs of AVC = 5 + 7q.(a) What are the firm's variable costs (VC)?(b) What is the firm's total cost function? (0) If the price is $75, how much does the firm supply? (d) Does the firm continue to supply this quantity in the short-run? (e) Suppose there exists a standard market demand function from consumers(downward slopping). Please provide a logical discussion about how the marketachieves short-run equilibrium.
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The market determined price in a perfectly competitive industry is P = Rs. 10. Suppose that the total cost equation of an individual firm in the industry is given by the expressionTC 1000+2Q+0.01Q2a) What is the firm’s profit-maximizing output level and profit? Is this profit normal profit or supper normal profit? Justify your answerb) At profit maximizing level what is firm total cost, total revenue and marginal cost c) Why does a competitive firm is considered as a price taker and Monopoly firm as a price maker
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The market determined price in a perfectly competitive industry is P = Rs. 10. Suppose that the total cost equation of an individual firm in the industry is given by the expressionTC 1000+2Q+0.01Q2a) What is the firm’s profit-maximizing output level and profit? Is this profit normal profit or supper normal profit? Justify your answerb) At profit maximizing level what is firm total cost, total revenue and marginal costc) Why does a competitive firm is considered as a price taker and Monopoly firm as a price maker.
3. Suppose that fixed costs for a firm in the automobile industry (start-up costs of facto-ries, capital equipment, and so on) are $5 billion and that variable costs are equal to$17,000 per finished automobile. Because more firms increase competition in themarket, the market price falls as more firms enter an automobile market, or specifi-cally, P = 17,000 + (150/n), where n represents the number of firms in a market.Assume that the initial size of the U.S, and the European automobile markets are 300million and 533 million people, respectively.a. Calculate the equilibrium number of firms in the U.S. and European automobilemarkets without trade.b. What is the equilibrium price of automobiles in the United States and Europe if theautomobile industry is closed to foreign trade?c. Now suppose that the United States decides on free trade in automobiles withEurope. The trade agreement with the Europeans adds 533 million consumers tothe automobile market, in addition to the 300 million in the…