ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
expand_more
expand_more
format_list_bulleted
Related questions
Question
![reasons for why this representative
5] Assume several identical firms engaged in perfect competition have the short run production function Q =
L¹/a. Each firm pays a wage of w for each unit of labor employed and fixed costs are 10.
a) Assume the firm faces a tax, t, on its output. Determine how a change in this tax will affect output (
b) Assume the firm faces a tax, t, on its profit. Determine how a change in this tax will affect output (2).
c) based on your answers above, which of these two taxes is preferred by a government interested in
minimizing the harm to workers in the industry?](https://content.bartleby.com/qna-images/question/a5e1f356-0ce1-4958-a4c4-8d87d325e266/c7094010-584e-4c2c-b2cf-5b7ab7682f66/3iehhlyc_processed.jpeg)
Transcribed Image Text:reasons for why this representative
5] Assume several identical firms engaged in perfect competition have the short run production function Q =
L¹/a. Each firm pays a wage of w for each unit of labor employed and fixed costs are 10.
a) Assume the firm faces a tax, t, on its output. Determine how a change in this tax will affect output (
b) Assume the firm faces a tax, t, on its profit. Determine how a change in this tax will affect output (2).
c) based on your answers above, which of these two taxes is preferred by a government interested in
minimizing the harm to workers in the industry?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution
Trending nowThis is a popular solution!
Step by stepSolved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- Sugar Enterprises manufactures high speed personal computers as its main product line. Its short run production function is given by Q = 3600K - 4.5K² where Q is the number of computers produced in a week and K pertains to the number of units of capital. c.) Compute the marginal product of the 200th unit of capital. d.) How many computers can be produced by the firm in a week if there are 200 units of capital? e.) Compute the marginal product of the 300th unit of labor. f.) How many computers can be produced by the firm in a week if there are 300 units of labor?arrow_forwardA firm’s production function is Q = 10 + 30L - .5L2+ 30K – K2, and its competitive demand function is PQ= MRQ = d = $40. The prices of L and K are PL = $6 and PK= $12. Suppose K is fixed at K =10. Use Excel Solver to find the profit-maximizing quantity (Q). A. 660. B. 684. C. 764. D. 788. E. 864.arrow_forwardOn the graph input tool, change the number found in the Quantity Demanded field to determine the prices that correspond to the production of 0, 6, 12, 15, 18, 24, and 30 units of output. Calculate the total revenue for each of these production levels. Then, on the following graph, use the green points (triangle symbol) to plot the results. Calculate the total revenue if the firm produces 6 versus 5 units. Then, calculate the marginal revenue of the sixth unit produced. The marginal revenue of the sixth unit produced is________. Calculate the total revenue if the firm produces 12 versus 11 units. Then, calculate the marginal revenue of the 12th unit produced. The marginal revenue of the 12th unit produced is_________.arrow_forward
- 3. A firm has a production function given by 1 1 A) y = 4x³x² ; 1 1 B) y = 3x4x² ; a) What are the factor demand functions? b) What are the conditional factor demand functions? c) What is the cost function? d) What is the supply function? 1 1 C) y = 5x³x2; 11 D) y = 12xx².arrow_forward2. 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) What is the fixed cost? Solve the average variable cost function in the short-run. b) What is the supply function of each firm? c) Solve for the short-run equilibrium outcome: P*, Q* and q*. d) What is one firm's economic profit in this market?arrow_forward2.2arrow_forward
- A10arrow_forwardNeed help.arrow_forwardImagine a perfectly competitive wood industry composed of 240 identical firms. The production output, q for each firm is determined by the function 9 = K1/2* L¹1/2, where K represents capital and L stands for labor. The $25 and PL prices for capital and labor are PK = $4, respectively. With labor fixed at 25 units, and the market demand described by Qd = 260 2P, what would be the economic profit or loss at equilibrium for these firms? -98 -99 99 98 = =arrow_forward
- 4. A competitive firm has the three-factor production function f(x, y, z) = (x + y)2/3z4/3. The factor prices used to be w = 4, wy = 2, and w, = 1. Suppose %3D that the price of factor y doubled while the other two prices stayed the same. Then the minimum cost of production: A. doubled. B. increased by more than 50% but less than 100%. C. increased by less than 50%. D. stayed the same.arrow_forwardA firm's profit function is T(q) = R(q) – C(q) = 40q – (35 + 20q + - 10q²). What is the positive output level that maximizes the firm's profit (or minimizes its loss)? What is the firm's revenue, variable cost, and profit? Should it operate or shut down in the short run? The output level at which the firm's profit is maximized is q =. (Enter your response as a whole number.) At this level of output, the firm's revenue (R) is $ (Enter your response as a whole number.) At the profit-maximizing level of output, the firm's variable cost (VC) is $ - (Enter your response as a whole number.) Profit (T) is $ (Enter your response as a whole number and include a minus sign if necessary.) The firm should produce in the short run.arrow_forward2. 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. What is the fixed cost? Solve the average variable cost function in the short-run. b. What is the supply function of each firm? c. Solve for the short-run equilibrium outcome: P*, Q* and q*. d. What is one firm's economic profit in this market? e. 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.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education