a. Specify the first order condition for the firm's profit maximization problem. b. Suppose there is a differentiable function x(p) that satisfies the implicit function above. Using the chain rule, find x' (p). c. Specify conditions on the function f(x) so that x' (p) > 0.
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- A competitive firm produces a product using the function f(x1,x2)=8x1/21x1/22f(x1,x2)=8x11/2x21/2. The factor prices are p1=$2.50p1=$2.50 and p2=$4p2=$4 and the firm can purchase as much of either factor at the given prices. What is the firm's marginal cost? a. None of the above b. ≈$1.07 c. ≈$2.32 d. ≈$1.74Given - Answers for question #1 A-D (A)πA=780QA−145(QA+QB)QA−400QAπA=780QA-145QA+QBQA-400QA is the firm profit function of firm A . (B)QA=8550−QB2QA=8550-QB2is the best response function of firm A (C)πB=780QB−145(QA+QB)QB−260QBπB=780QB-145QA+QBQB-260QB is the firm profit function of firm B . (D)QB=11700−QA2QB=11700-QA2is the best response function of firm B Please answer questions #2 A-DIn a price-taker market, if a business produces efficiently (i.e., that is, where marginal revenues = marginal costs), the firm will be able to make at least a normal profit. True of False. Explain. All firms produce where MR=MC. Price takers produce and price where P=ATC=MC=MR. That is the "normal profit" level. Profits above that level are considered "economic profits." Review economic profits, normal profits, explicit costs, and implicit costs. Why is 'normal profit' considered to be a cost, in economics?
- Start from a market with perfect competition. For a representative producer, the long-term marginal cost is given by LMC=9Q2−20Q+50LMC=9Q2−20Q+50 and the long-term total cost function is LTC=3Q3−10Q2+50QLTC=3Q3−10Q2+50Q Assume that the price on the market right now is SEK 50. a) How much profit or loss does the producer make in the initial situation? b) Describe in detail what will happen in the market and why c) What will the equilibrium price be? d) how much will our producer produce at market equilibrium?Nicole wants to examine first if she wants to enter the market for Chanel bags and she assumes that the market is under perfect competition. She observed that all the firms that are producing Chanel bags have the same LR cost function and is given by C = 200 + 20q + 0.5q2. All firms present in the market has a fixed cost of $200 if it produces a positive output, otherwise the LR cost is zero if there is zero production. The market demand for Chanel bags is QD = 1000 - 2p, where p is the price of one umbrella. Currently, Nicole counted that there are 22 firms in the industry and that the market is a constant cost industry.(c) Suppose that the demand for the Chanel Bag shifts to QD = 1600 - 2p. Assuming that the industry is in the LR equilibrium, solve for the market clearing condition and the number of firms present.Following is Ahmed’s competitively firm data and solve all the parts and subparts: Output (Q) Total Cost Total Revenue 0 62 0 30 90 40 60 110 80 90 126 120 120 138 160 150 150 200 180 165 240 210 190 280 240 230 320 270 296 360 a. Find the profit maximizing output. b. Find: a. FC b. VC c. ATC d. AFC e. AVC f. MC c. Find the efficient scale of output. d. Draw all the curves for the variables in part b using two-dimensional space.
- You are the manager of a firm that sells a “commodity” in a market that resembles perfect competition, and your cost function is C(Q) = 2Q + 3Q2. Unfortunately, due to production lags, you must make your output decision prior to knowing for certain the price that will prevail in the market. You believe that there is a 70 percent chance the market price will be $200 and a 30 percent chance it will be $600.a. Calculate the expected market price.$ b. What ouptut should you produce in order to maximize expected profits?unitsc. What are your expected profits?$Sunrise Juice Company sells its output in a perfectly competitive market. The firm's total cost function is given in the following schedule: Output Total Cost (Units) ($) 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.c)Given that the cost function MC=x-2x^2-1 and the revenue function as MR=2x^2-3x-1.Assuming pure competition,determine the point atwhich profit maximized and the total profit made.
- 40) A perfectly competitive firm will earn ________ economic profits in the range of output for which the firm's price is above its minimum average total cost. A) positive B) negative C) zero D) Any of the above answers could be correct. 41) If a perfectly competitive firm's average total cost curve is below its demand schedule at any level of output, then the firm will earn ________ profits. A) positive B) breakeven C) negative D) zero 42) A perfectly competitive firm ________ at the level of output where P = ATC. A) earns an economic profit B) suffers an economic loss C) breaks even D) shuts down 43) If P = MC and MC ATC, then a perfectly competitive firm will earn ________ profits. A) positive B) zero C) negative D) break-even 44) If a perfectly competitive firm is currently producing where P = MC and MC = ATC, then the firm will earn ________ profits. A) positive B) zero C) negative D) above normal 45) If…Can you help with this question and show all the step please. Consider a manufacturer making leather cases with a market demand function (weekly) given by P=95-Q/Q+1 +5, where Q is the number of leather cases. (A) Show that this function is consistent with the law of Demand (i.e. that when Q increases, P decreases). (B) The manufacturer has weekly fixed costs of $20 and variable costs of $5 per leather case. Formulate the profit function from this information. (C) Locate the stationary points and determine the optimal Q that maximises the profit. (Use the first derivatives test to classify any stationary point).You are the manager of a bakery that produces and packages bran buns. According to the new research, a typical consumer's inverse demand function for your bran buns is P = 4-0.5Q . Your cost of producing bran buns is C (Q) = 1Q . a) Determine the optimal number of bran buns to sell in a single package and the optimum package price. Find profits you earn. b) Suppose your company sells buns charging per-unit price. Find the profit-maximizing price. c) Compare profits your company would earn using the strategy of one price (b) with profits generated in (a).