Consider the following total cost function for an individual firm: C(q)= 10 +q + ¼ q^2 a- At what level of output is average cost at its lowest? b- Draw a graph showing firm average cost against quantity. c- Suppose that there is an industry with two identical firms, with this cost function. What is the industry total cost curve? What is the industry marginal cost curve?

Consider the following total cost function for an individual firm: C(q)= 10 +q + ¼ q^2 a- At what level of output is average cost at its lowest? b- Draw a graph showing firm average cost against quantity. c- Suppose that there is an industry with two identical firms, with this cost function. What is the industry total cost curve? What is the industry marginal cost curve?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 11PA: Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2...

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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?
2) Cost functions Please answer only part d Consider the following total cost function for an individual firm: C(q)= 10 +q + ¼ q^2a- At what level of output is average cost at its lowest?b- Draw a graph showing firm average cost against quantity.c- Suppose that there is an industry with two identical firms, with this cost function.What is the industry total cost curve? What is the industry marginal cost curve?d- Suppose these two firms together act in a perfectly competitive manner. What is theprice level in the case where these firms act perfectly competitively? What are theprofits of the firms given perfectly competitive pricing?
Marginal Analysis II Question 2 Suppose a competitive firm has as its total cost function: TC=18+2q2TC=18+2q2 Suppose the firm's output can be sold (in integer units) at $58 per unit. Using calculus and formulas (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. In the case of equal profit from rounding up and down for a non-integer initial solution quantity, proceed with the higher quantity. 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. Hint 2: When computing the total cost component of total profit for a candidate quantity, use the total cost function provided in the…
Q2.The management of an ‘Electronic Goods’ manufacturing company asked you to give an advice about changing its current production plan, given the following information:- Annual production plan of computers is 4200 computers.- Total cost of production is OMR 824000.- Fixed cost is OMR 320000.- Revenue function: R = 460.2Q – 0.05Q2 1-Use the above information to formulate the price function and the total cost function, and determine the following: 1) Profit-maximizing quantity.2) Profit-maximizing price.3) Maximum profit value.4) Revenue-maximizing quantity. 2-Should the company change its current annual production plan of computers in order to maximize its profit?
QUESTION 2 (a) Use the concepts of economies and diseconomies of scale to explain the shape of a firm’s long-run ATC curve. What is the concept of minimum efficient scale? What bearing can the shape of the long-run ATC curve have on the structure of an industry? (b) If a firm in monopoly maximizes revenue, does it automatically maximize profit too? Explain the content with relevant example and diagrams.
2. A firm can produce up to 500 units each week. If its average cost function is C(x) = 500/x + 1500 and its total revenue function is given by: R(x) = 1600x − x^2 • What production maximizes profit? What is the maximum profit for that production level? • What production makes the profit equal to zero? (that point is called the break-even point) 3. The joint cost (in thousands of euros) for two products X and Y can be given by the following formula: C(x, y) = 40 + y^2 + 3x + 2xy + (x^2) y + y^3 where x represents the quantity of product X that is produced and y represents the quantity of product Y produced. • If 12 units of product X and 20 units of product Y are produced, what are the marginal costs? • What product line should be expanded in the current level of production?
A purely competitive firm finds that the market price for its product is $25.00. It has a fixed cost of $100.00 and a variable cost of $10.00 per unit for the first 50 units and then $30.00 per unit for all successive units. Instructions: Round your answers to 2 decimal places. a. Does price equal or exceed average variable cost for the first 50 units? (Click to select) No Yes What is the average variable cost for the first 50 units? b. Does price equal or exceed average variable cost for the first 100 units? (Click to select) No Yes What is the average variable cost for the first 100 units? c. What is the marginal cost per unit for the first 50 units? What is the marginal cost for units 51 and higher? d. For each of the first 50 units, does MR exceed MC? (Click to select) No Yes What about for units 51 and higher? (Click to select) No Yes…
5. Explain what is the relationship between marginal cost and average total costs for a firm or industry exhibiting each of the following:a. Economies of scale.b. Constant returns to scale.c. Diseconomies of scale.
Question four Suppose that a firm's total cost equation is TC= 10,000+ 1000 + 0.25Q2 Where TC is total cost and Q is the level of output. (a) What output level will minimize the firm's average total cost? (b) Calculate the average and marginal cost at the average cost minimizing output level
Demand function is given by Q=84-2P and cost function is C(q)=25+2q+q2 1) What are the qualitative features of the costs of this cost function? i.e. average, marginal, variable, properties, and what are the key prices – shut price, breakeven price, revenue maximizing and profit maximizing price? 2) Using this cost structure and demand - how many firms are likely to operate in the long run (note: that in the long run firms tend to operate close to minimum average cost)?
Question 15 (i) Which of the following is(are) correct about how accountants and economists consider costs? Accountants consider only implicit costs Economists consider both explicit and implicit costs A: 1 only B: 2 only C: Both 1 and 2 D: Neither 1 nor 2 (ii) Which of the following statements is(are) correct for a monopoly firm and a competitive firm? Both firms earn economic profit in the long run. Both firms aim to maximize profit and produce at P = MC. A: 1 only B: 2 only C: Both 1 and 2 D: Neither 1 nor 2
Question (3): Consider the firm whose goal is to maximize profits and there is competition in the marketplace. The firm’s total revenue and cost functions are displayed below. R(q)=q2+14q+20 C(q)=2q2-8q+15 What is the firm’s total fixed cost function, and total fixed costs of production? How many units must the firm manufacture to minimize its total costs of production? (For this question give me detailed, not too much, answer )