7. Assume that the marginal cost curve is given by mc(q) = 100 + 2q. (a) If the price is $160, what is the optimal production for the firm? What if the price is $120? (ignore the shut-down decision for this part) (b) Assuming that the market is cleared at $160 (no shortage/surplus). If the market demand is equal to 10, 000 units of the product. How many firms are currently operating (n) in the market? (Hint: if the market clears qd = n x q°) (c) If the total cost curve is TC = 256 + 100g + q², what’s the average total cost curve? what's the break-even price? (d) If the demand curve is given by qd = 8, 452 - P, what's the long-run equilibrium price, the equilibrium quantity and the long-run total number of firms (n) in the industry?

7. Assume that the marginal cost curve is given by mc(q) = 100 + 2q. (a) If the price is $160, what is the optimal production for the firm? What if the price is $120? (ignore the shut-down decision for this part) (b) Assuming that the market is cleared at $160 (no shortage/surplus). If the market demand is equal to 10, 000 units of the product. How many firms are currently operating (n) in the market? (Hint: if the market clears qd = n x q°) (c) If the total cost curve is TC = 256 + 100g + q², what’s the average total cost curve? what's the break-even price? (d) If the demand curve is given by qd = 8, 452 - P, what's the long-run equilibrium price, the equilibrium quantity and the long-run total number of firms (n) in the industry?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter2: Mathematics For Microeconomics

Section: Chapter Questions

Problem 2.2P

See similar textbooks

Similar questions

If the fixed cost of producing output Y is P150,000, variable cost is P300 per unit and the price of Y is P600 per unit, suppose the price of Y decreases by 25%, ceteris paribus, should the farmer continue producing 500 units of output? Explain why or why not.
Explain why a firm might want to produce its good even after diminishing marginal returns have set in and marginal cost is on the rise. People often believe that large firms in an industry have cost advantages over small firms in the same industry. For example, they might think a big oil company has a cost advantage over a small oil company. For this to be true, what condition must exist? Explain your answer.
A manufacturer of upholstery can sell 2121 yards of fabric at a price of $3.11$⁢3.11 per yard. If the price is $1.85$⁢1.85, she can sell 3535 yards. The total cost of manufacturing x yards of fabric is C(x)=0.6x+36C(x)=0.6x+36 dollars. Step 1 of 3 : Assuming the demand function is linear, find an equation for D(x)D(x). Do not round your answer.
A firm is deciding between two different sewing machines. Technology A has fixed costs of $500 and marginal costs of $50 whereas Technology B has fixed costs of $250 and marginal costs of $100. If the price is $20 per unit, what is the break even amount of units for technology A? A firm is deciding between two different sewing machines. Technology A has fixed costs of $500 and marginal costs of $50 whereas Technology B has fixed costs of $250 and marginal costs of $100. If the price is $20 per unit, what is the break even amount of units for technology A? a. 70 b. 60 c. 50 d. None - They would have to shut down
A firm has access to two production processes with the following marginal cost curves: MC1 = 0.25x and MC2 = 6+0.1y, where output in production process 1 is x, output in production process 2 is y and hence total output produced is Q = x+y. Show your work to answer the following questions. (i) If it wants to produce 20 units of output, how much should it produce with each process? (ii) If it wants to produce 38 units of output, how much should it produce with each process? (iii) If it wants to produce 108 units of output, how much should it produce with each process?
1.The price p in dollars of a certain commodity and the quantity x sold obey the demand equation p= -1/5x + 200 where 0<=x <=1000. Suppose that the cost C in dollars of producing x units is C= the square root of x divided by 10 + 400. Assuming that all items produced are sold, find the cost of c as a function of the price p.
A manufacturing firm faces the cost of production as follows : Quantity Total Fixed Costs Total Variable Costs 0 $ 100 0 1 $ 100 $ 40 2 $ 100 $ 60 3 $ 100 $ 80 4 $ 100 $ 130 5 $ 100 $ 190 6 $ 100 $ 350 (a) Calculate the company's average fixed costs, average variable costs, average total costs,, and marginal costs at each level of quantity larger than zero (b) Suppose the price of the firm's product is $ 90, what is the firm's optimal production quantity? What is the firms profit under this quantity?
1. A farmer is deciding whether or not to add fertilizer to his or her crops. If the farmer adds 1 pound of fertilizer per acre, the value of the resulting crops rises from $80 to $100 per acre. According to marginal analysis, the farmer should add fertilizer if it costs less than A. $100 per pound. B. $20 per pound. C. $80 per pound. D. $40 per pound. E. $60 per pound. 2. If a firm is currently producing zero output, total costs equals A. average variable costs. B. marginal costs. C. zero. D. total variable costs. E. total fixed costs. 3. Here are three things that you could do if you do not attend your next-door neighbor's barbecue: watch television with some friends (you value this at $8), read a good novel (you value this at $4), or go in to work (you could earn $6 during the barbecue). The opportunity cost of going to your neighbor's barbecue is A. $6, because this is the only alternative of the three where you actually receive a monetary payment. B.…
A firm has a fixed production cost of $4000. For the first 100 units of production, the firm has a marginal cost of $50 per unit produced. Producing more than 100 units has a marginal cost of $70 per unit produced. The firm cannot produce more than 150 units. How much does it cost to produce at q=0? at q=50? at q=100? at q=125? at q=150? Graph the firm’s marginal cost function
Suppose a typical (representative) corn farm has a short run production technology which results in the outcome of U-shaped Average Variable Cost (AVC), Average Total Cost (ATC), and Marginal Cost (MC). Further, suppose this firm sells its product in a market where the price of the good is determined by the interaction of market Demand and Supply. Because an individual firm is very small compared to the rest of the market, we treat the market price as the price given to the firm, and the individual firm cannot impact that price. assume we are in the Short Run for this firm. In graphing, put $ on the vertical axis and lower-case q (firm output) on the horizontal axis. Start with the AFC0, AVC0, ATC0, and MC0 curves . show shifts in any of the cost curves, reflecting the higher cost of land (keeping in mind that this higher cost is independent of how much or how little corn is actually produced) and labeling the changed cost curves with a subscript 1. On the graph with $ on the…
The cost function for Acme Laundry is C(q)=50+30q+q2, where q is tons of laundry cleaned. What q should the firm choose so as to maximize its profit if the market price is p?
1. If profit is maximum at sales of 700 units, does the firm have no choice but to limit sales at this level? Explain your answer. 2. A business firm produces and sells a particular Variable cost is P30/unit. Selling price is P40 per unit. Fixed cost is P60,000. a. What is the break-even quantity and break-even point? Show your solution. 3. A manager makes the statement that output should be expanded as long as average revenue exceeds average Does this strategy make sense? Explain. 4. Suppose that the steel firm’s costs are shown below: Complete the table and determine the optimal output to be Price of steel P17 per unit. Output (Q) TFC TVC TC MC TR MR Profit/Loss 0 500 0 1 500 50 2 500 90 3 500 140 4 500 200 5 500 270 6 500 350 7 500 450…