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) 5a Calculate price and quantity traded in equilibrium. 5b Calculate the industry's producer surplus and consumer surplus in equilibrium. Illustrate the surpluses and the equilibrium from subtask 5a in a figure. . Now suppose that the manufacture of cement creates environmentally hazardous waste that is discharged into the imme 5c

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) 5a Calculate price and quantity traded in equilibrium. 5b Calculate the industry's producer surplus and consumer surplus in equilibrium. Illustrate the surpluses and the equilibrium from subtask 5a in a figure. . Now suppose that the manufacture of cement creates environmentally hazardous waste that is discharged into the imme 5c

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.7P

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Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2 Marginal cost: MC = q where q is an individual firms quantity produced. The market demand curve for this product is Demand:QD = 120 P where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market. a. What is each firms fixed cost? What is its variable cost? Give the equation for average total cost. b. Graph average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is average-total-cost curve at its minimum? What is marginal cost and average total cost at that quantity? c Give the equation for each firms supply curve. d. Give the equation for the market supply curve for the short run in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market in the short run? f. In this equilibrium, how much does each firm produce? Calculate each firms profit or loss. Is there incentive for firms to enter or exit? g. In the long run with free entry and exit, what is the equilibrium price and quantity in this market? h. In this long-run equilibrium, how much does each firm produce? How many firms are in the market?
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