4. For production functions i) q = K0.25L0.25, %3D ii) q = K0.5Lº.5. iii) q = KL a) Assume w= $20 and v = $20, what are the long-run MC and AC equations? b) Tun the MC functions into firmlong-run supply equations. c) Graph the MC and AC functions. Assume that the price of output is $20, explain how the q = q(p = $20) might or might not be a profit-maximizing outcome and whether the

4. For production functions i) q = K0.25L0.25, %3D ii) q = K0.5Lº.5. iii) q = KL a) Assume w= $20 and v = $20, what are the long-run MC and AC equations? b) Tun the MC functions into firmlong-run supply equations. c) Graph the MC and AC functions. Assume that the price of output is $20, explain how the q = q(p = $20) might or might not be a profit-maximizing outcome and whether the

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.9P

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1) Graphite is an input into the production of pencils. If the pencil market is perfectly competitive, then in the short-run an increase in the price of graphite will cause: (a) The supply curve for pencils to shift up: True or False? (b) An increase in the market price for pencils. True or False? (c) The demand curve for pencils to shift down. True or False? For each of (a), (b), and (c) above, indicate whether the statement is True or False? Explain each briefly. Provide a graph illustrating your answer
Place the orange line (square symbol) on the following graph to show the most likely long-run supply curve for pistachios. (Note: Place the points of the line either on Y and V or on Y and S.) PRICE (Dollars per pound) 48 40 32 16 8 O 0 4 S V Short-Run Supply 2 6 8 10 QUANTITY (Thousands of pounds of pistachios) 12 Long-Run Supply ? 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.
9.- A competitive firm reaches the minimum of the long-run average cost for y = 20 when it operates with the short-run cost function C = yi3-20yi2 + 100yi + 8000, where yi is the production of the firm. Then the long-run price equilibrium will be 500. If the government imposes a specific tax on output of 40 euros, what are the taxes collected by the government in the short-run and in the long-run, if the market demand is given by x = 2500 - 3p, where x is the quantity demanded by consumers and p is the price? Will the government collect more or less taxes in the long-run than in the short-run? Why?
Q) The short-run market demand andsupply for Kente cloth are expressed as follows:Demand: ? = 40−0.25?Supply: ? = 5+0.05?Marginal cost: −20 +4? a)The short-run level of output is ___________ metres.[1] 40.00[2] 5.05[3] 35.30[4] 20.00[5] 7.71
7. Short-run supply and long-run equilibrium Consider the competitive market for copper. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. The following diagram shows the market demand for copper. Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 15 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 20 firms. If there were 20 firms in this market, the short-run equilibrium price of copper would be ___ per…
7. Short-run supply and long-run equilibrium Consider the competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. The following diagram shows the market demand for titanium. Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 15 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 20 firms. If there were 20 firms in this market, the short-run equilibrium price of titanium would…
. The market for apples is perfectly competitive and currently has 400 identical firms. Each firm has fixed costs of $16 and average variable costs given below: Quantity Average Variable Cost 1 $1 2 $2 3 $3 4 $4 5 $5 6 $6 7 $7 a) The equilibrium price is currently $11. How much does each firm produce in order to profit maximize and what is the total quantity supplied in the market? b) As the market transitions to long-run equilibrium, will the price of app;es fall or will it rise? Explain.
“New England power producers are preparing for potential strain on the grid this winter [Winter 2022-23: December 2022 through February 2023] as a surge in natural-gas demand abroad threatens to reduce supplies they need to generate electricity.” For Question 1, consider the New England market for electricity prior to Winter 2022-23 by considering this setting roughly one year ago, in December 2021. Assume that in December of 2021, the market for electricity was in a short-run equilibrium. Draw a graph that shows supply and demand for electricity market in its December 2021 equilibrium. This graph will serve as a starting point for your analysis in Questions 2 through 5. When drawing this graph, please assume that the demand curve is downward sloping and supply curve is upward sloping. Clearly show the market equilibrium in December 2021, labeling the equilibrium price and quantity. Please remember to clearly label your axes, with P on the vertical axis and Q on the horizontal axis.…
Starting from an equilibrium condition, consider an increase in income in a perfectly com-petitive market with a normal good. (a) Draw the MC, ATC and price level on the same graph before and after the change in income. (b) What will happen to the number of firms in the long-run? (c) If the number of firms change, what will happen to the short-run supply curve? (d) What’s the long-run production and price level. (e) Draw the long-run supply curve.
Now suppose that coffee shop coffee is a normal good and income goes up. Starting from the diagram in (1), show and discuss with your group how the market will adjust towards a short-run equilibrium and then return to a long-run equilibrium. What happen to the market price and quantity in the short-run? What happens to individual firm output and the number of firms in the short-run? What is the profit in the short-run? What happen to the market price and quantity in the long-run? What happens to individual firm output and the number of firms in the long-run? What is the profit in the long-run? (in reference to https://www.bartleby.com/questions-and-answers/market-for-coffee-shop-coffee-sarbucks-store-market-for-coffee-shop-coffee-sarbucks-store/0b934604-546c-4b2a-ae02-e65f6f9c2eb2 )
1 Hypothetical Case 1 The following equations describe the long-run situation for prices and costs, where the numbers indicate the amounts of labor and capital needed to produce a unit of wheat and cloth. W is the wage rate/hour and R is the rental rate/hour. Price of wheat = 1 W + 2 R Price of cloth = 2 W + 1 R In autarky, the price of wheat is 5 and the price of cloth is 4. As trade opens up wheat price rises from 5 to 6. Cloth price remains at 4. Consider Hypothetical Case 1 above. After trade opens up, how many units of wheat can a worker buy with one hour of labor?
Illustrate and explain how the short-run supply curve of a price-taking firm is determined.