A given firm, which is part of a perfectly competitive market, would have following cost function: TCLR = 2X3 - 20X2 + 200X What will be its level of output (X) and long-run equilibrium price (P)? NOTE: TCLR is long run total cost function
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Course:
A given firm, which is part of a
TCLR = 2X3 - 20X2 + 200X
What will be its level of output (X) and long-run
NOTE: TCLR is long run total cost function
Step by step
Solved in 2 steps
- Assume the following cost data are for a purely competitive producer: Explain: “That segment of a competitive firm’s marginal cost curve that lies above its average-variable-cost curve constitutes the short-run supply curve for the firm.” Illustrate graphically. How does this curve relate to the law of diminishing returns (Chapter 6)?[TRUE / FALSE] Please explain In the real-world, marginal cost curve is usually U-shaped.Therefore, in a perfectly competitive market, a firm can maximize profit at two different output levels in the short-runConstruct a short-run supply schedule for the firm and indicate the profit or loss incurred at each output. Assume the following unit-cost data are for a purely competitive producer. ( See table below) REQUIRED: E. When the product price is set at $46, how many is the quantity supplied by the firm? F. When the product price is set at $46, how much would be the economic profit that the firm will realize per unit of output?
- Marginal Analysis II Question 1 Assume that a competitive firm has the total cost function: TC=1q3−40q2+870q+1500TC=1q3-40q2+870q+1500 Suppose the price of the firm's output (sold in integer units) is $700 per unit. Using calculus and formulas to find a solution (don't just build a table in a spreadsheet as in the previous lesson), how many integer units should the firm produce to maximize profit? Please specify your answer as an integer. Hint 1: The first derivative of the total cost function, which is cumulative, is the marginal cost function, which is incremental. The narrated lecture and formula summary explain how to compute the derivative. Set the marginal cost equal to the marginal revenue (price in this case) to define an equation for the optimal quantity q. Rearrange the equation to the quadratic form aq2 + bq + c = 0, where a, b, and c are constants. Use the quadratic formula to solve for q: q=−b±b2−4ac−−−−−−−√2aq=-b±b2-4ac2a For non-integer quantity, round up and down to…Sunrise Juice Company sells its output in a perfectly competitive market. The firm's total cost function is given in the following schedule: Output Total Cost (Units) ($) 0 50 10 120 20 170 30 210 40 260 50 330 60 430 Total costs include a "normal" return on the time (labor services) and capital that the owner has invested in the firm. The prevailing market price is $7 per unit. (a) Prepare (i) marginal cost and (ii) average total cost schedules for the firm. (b) What is the firm's profit maximizing output level? (c) Is the industry in long-run equilibrium? Justify your answer.Assume the following total cost schedule for a perfectly competitive firm. Output TVC TFC 0 0 100 1 40 100 2 70 100 3 120 100 4 180 100 5 250 100 6 330 100 The total cost of producing 6 units of output is __________________ If the firm is producing at an output level of 2 units, the ATC is _____________ and the AVC is ______________ The profit-maximizing firm would shut down in the short run if the market price of its output dropped below ___________________ At what price would a profit-maximizing firm earn zero economic profits? _______________
- Q)Assume that a competitive firm has the total cost function: TC=1q^3−40q^2+740q+1600 Suppose the price of the firm's output (sold in integer units) is $650 per unit. Create tables (but do not use calculus) with columns representing cost, revenue, and profit to find a solution. A. How many units should the firm produce to maximize profit? B. What is the total profit at the optimal output level? Please specify your answer as an integer.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 ?Suppose you are the economic advisor of Jackie Brown Company, a perfectly competitivecompany that is suffering economic losses due to unforeseen continuous drop in the market price.Jackie Brown is a price taker; hence it cannot influence the market price, nor could it changeproduction technology in the short run. You are asked to decide whether the company should shutdown its operations or to continue to operate at a loss. Jackie Brown is selling 50 units of outputper day, at a price of $20 per unit. The cost of raw material, direct labor, energy, and othervariable inputs is about $24000 monthly. Unfortunately, an estimate of Jackie Brown fixed costs iscurrently unavailable. So, what is your decision?
- A firm in a perfectly competitive market faces a market price of $80, and has a total cost function: TC(Q) = Q3 – 28Q2 + 245Q + 1000. A. If the firm charges $85, how many units will they sell? B. If this firm produces Q = 15, is their profit maximized? C. If these are short run conditions and the firm is producing Q = 15, should the firm stay open or shut down temporarily? Clearly show or explain your reasoning.A perfectly competitive industry consists of 700 identical firms, each with a short-run supply curve given by Qs = –20 + 15P. What is the equation for the industry's short-run supply curve?Q -1: For an individual firm in a perfectly competitive market, let its cost function bec(y) = 8y2 + 5y + 6.a) Determine the firm’s marginal cost, average total cost, average fixed cost, and average variable cost in terms of the market price, p. Answers should not be in terms of quantity y.b) What is the firm’s short-run shutdown condition?c) Find the firm’s short-run shutdown price ˆp. That is, if the market price falls below ˆp, the firm will shutdown.
