5. The demand for cement is given by P= 40 - 8Q, where P is the unit price in kroner (SEK) and Q is quantity demanded (measured as tons of cement per day). A cement industry characterized by perfect competition has a short-run supply function given by P=4+Q. (Note that 4+ Q is the industry's marginal cost) im. 5b Calculate the industry's producer surplus and consumer surplus in equilibrium. Illustrate the surpluses and the equilibrium from subtask 5a in a figure. 50 Calculate the size of the unit tax that when paid by the producers leads until the socially optimal level of production is reached.
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A: TC = 4q3 - 24q2 + 40q Qd = 6000 - 120P
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- Please no written by hand solution Question 1: The wheat market is perfectly competitive, and the market supply and demand curves are given by the following equations: QD = 20,000,000 - 4,000,000P QS = 7,000,000 + 2,500,000P, where QD and QS are quantity demanded and quantity supplied measured in bushels, and P = price per bushel. a. Determine consumer surplus at the equilibrium price and quantity. Provide a fully labelled diagram to support your answer. Show all intercepts, equilibrium label axis and curves fully.PROBLEM (4) The short run market supply for shirts is QS = 50P – 1000 and the market demand isQD = 2800 – 50P Let a typical firm operating in a perfectly competitive industry has short-run total cost and marginal cost curves: TC(q) = 100 + 20q + q2 and MC(q) = 20 + 2q (a) Determine the short run market equilibrium price and quantity for this type of shirt.(b) Determine how much the typical firm will produce at the equilibrium price you found in (a).(c) If all firms had the same cost structure, how many firms should be operating in this industry at the moment? (d) Calculate the profit or loss of each firm at the short-run market equilibrium. If they are making losses, why are they still producing in the short run? In the long run, will there be entry into the market or exit from it?(e) What would the price be in the long run equilibrium, assuming constant cost industry?(f) In the long run equilibrium, how many shirts would each firm produce? What would be a firm’s net profit?(g) How…The table below shows the average cost (AC) for a purely competitive market. The average revenue (AR) is constant at RM5 per unit and the firm’s total fixed cost (TFC) is RM4. If the average revenue falls to RM3 per unit, calculate the firm’s new profit or loss at the equilibrium. Based on your answer, should the firm continue or stop the production? Justify. Output (Units) Total Revenue (RM) Average Cost (RM) Total Cost (RM) Marginal Cost (RM) Marginal Revenue (RM) 1 8.0 2 5.5 3 4.0 4 3.5 5 3.8 6 4.5 7 6.0
- In competitive markets economic profit becomes zero in the long-run. However, it is also possible for somefirms to earn a greater accounting profit and to enjoy a higher producer surplus than other firms. How is itpossible? Explain in detailSuppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + 0.5Q^2The market demand curve for this product is: Qd= 120 −PThere are 9 firms in the market.a) What are each firm’s: fixed cost, variable cost, marginal cost, and average total cost? Graph the average-total-cost curve and the marginal-cost curve.b) Give the equation for each firm’s supply curve.the average-total-cost curve at its minimum? What is marginal cost and average totalc) Give the equation for the market supply curve for the short run in which the numbercost at that quantity?Consider the market for solar power. Assume the market is perfectly competitive and initially in long-run equilibrium; solar power sells for $.25 per kwh (kilowatt hour, a unit of power). Draw 2graphs, one to represent the market (supply and demand), and one to represent a single firm (demand, marginal cost, and average cost curves). Assume a u-shaped average cost. Show the equilibrium price and the quantity produced by the market (Q) and by each individual firm (q). Next, to encourage conservation, Congress taxes all forms of energy EXCEPT solar power, causing an increase in the demand for solar. Show what happens to the market and the firm in the short run; indicate clearly what happens to price, quantity, and profit. What happens to the market and the firm in the long run? Indicate clearly what happens to price, quantity, and profit, for each the market and the firm.
- 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…An industry currently has 100 firms, each of which has fixed cost of $16 and averagevariable cost as follows:Quantity Average Variable Cost1 $ 12 23 34 45 56 6a. Compute a firm’s marginal cost and average total cost for each quantity from 1 to 6.b. The equilibrium price is currently $10. How much does each firm produce? What isthe total quantity supplied in the market?c. In the long run, firms can enter and exit the market, and all entrants have the samecosts as above. As this market makes the transition to its long-run equilibrium, willthe price rise or fall? Will the quantity demanded rise or fall? Will the quantitysupplied by each firm rise or fall? Explain your answers.A perfectly competitive hardware manufacturer has a total revenue of $85 million, total variable costs of $45 million, and fixed costs of $10 million. What is the firm’s producer surplus?
- True or false: In a constant-cost industry, a tax of a constant, fixed amount on each unit of output sold will not affect the amount of output sold by a perfectly competitive firm in the long run. Explain.1- Suppose that the total cost function of a firm is given as follows;TC = 500 + 2Q2And the price of the firm’s product is determined by the market equilibrium at $100.a- Set the profit maximizing condition . Find the profit maximizing output level for this firm .b- What is the total revenue ?c- What is the total cost ?d- What is the profit earned by the firm ?e- Illustrate your answer by using a well-labeled graph .f- Denote the break even price level with Pb on the same graph .g- Denote the shut down price level with Ps on the same graph.h- Show the firm’s supply curve on the same graph .i- Does the firm function in short-run or long-run ? Why ?A firm operating in a perfectly competitive market has a total cost function: CT = Q3 - 24Q2 + 260Q + 350Supply and demand functions in this market are Qo = 10 P - 750 and Qd = 6,000 - 15 Pa. Calculate what quantity you will produce to maximize profits and find profit you will make.b. Graph tmarket equilibrium and firm's equilibrium and calculate minimum operating profit.