Q: In the long-run, any perfectly competitive firm that produces will choose a quantity such that
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Q: the demand curve for a competitive firm is
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A: Perfect competition is the one of structure of market in which many numbers ofbuyers and sellers…
Q: What are the characteristics of a perfectively competitive market?
A: There are different market structures with different characteristics.
Q: Under what conditions will a firm exit a market? Explain theoretically and graphically.
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Q: When will a firm neither enter or exit a competitive market?
A: In competitive market firms are free to enter and exit.
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Q: What are the Characteristics of a Purely Competitive Market?
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Q: equilibrium
A: The equilibrium of the perfectly competitive firm from the equilibrium of the industry is different…
Q: List the requirements for a perfectly competitive goods market.
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Q: How equilibrium price is determined under perfect competition?
A: Under perfect competition, both producers and consumers are price takers.
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A: Meaning of Producer Behavior: The term producer behavior refers to the situation under which a…
Q: When is it the right time when a firm will enter a competitive market?
A: A competitive market is considered as one where firms have no opportunity to deviate from market…
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Q: Derive theoretically and graphically the supply curve of an industry.
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A: The total cost incurred by a firm operating in a market includes fixed costs and variable costs.…
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Q: The supply curve of a competitive firm is the postion of marginal cost that is
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A: Given P = 100 – 10q MC = 20
Q: Only one firm able to produce profitably in a market given demand and costs describes a ____?
A: A monopoly market's features enable the sole seller both the market operator and the value creator.
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A: In a perfectly competitive market, many firms are selling homogenous products in the market. On the…
Q: Explain the effects firms entering or exiting have on the price and supply of a market. (assume the…
A: A perfectly competitive market is a type of market structure in which a large number of small firms…
Q: What is the short run Supply Curve for a competitive firm?
A: In perfect competition, the short-run supply curve is the marginal cost curve (MC) at and below the…
Q: Refer to the above diagram for a purely competitive producer. The lowest price at which the firm…
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Q: The following diagrams show the market for a good, as well as the cost curves for an individual firm…
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- A computer store sells WP and SS. Given below are themaximum amounts two consumers will pay for these goods and for a bundle that contains bothgoods. WP SS Bundle carolina $100 $90 $190 shawn $90 $40 $130 (a) What is the firm’s revenue if it sells the WP at a price of $90 and the SSat a price of $90? The goods are only available individually and not as a bundle. Please showyour calculations.(b) Will the firm charge $130 or $190 for the bundle if it wants to earn maximum revenue?Assume that the goods are only sold as a bundle and not available separately. Please explain.(c) Will selling individually or selling a bundle result in higher revenues?It costs $250 to produce an X-Box. We are trying todetermine the selling price for the X-Box. Prices between$200 and $400 are under consideration, with demand forprices of $200, $250, $350, and $400 given below. SupposeMSFT earns $10 in profit for each game that an X-Boxowner purchases. Determine the optimal price andassociated profit for the case in which an average X-Boxowner buys 10 games. Console Price ($) Demand200 2.00E06250 1.20E06350 6.00E05400 2.00E05Unit cost $250Suppose you are the economic adviser ofa company producing three brands of mobile pnones;Nokia 10, Samsung X and iPhone 7. Suppose further that, your company currently sells 120units of iPhone Z at e800 per unit, 150 units of Samsung X at e800 per unit and 200 units ofNokia 10 at e100 per unit, but in a bid to maximize profit, the company's managing directorproposes an increase in price of Samsung X from e800 to e1000 per unit for which quantitydemanded is anticipated to fall from 150 to 100 units; iPhone Z from e800 to e 1200 per unitfor which quantity demanded is anticipated to fall from 120 to 100 units; and Nokia 10 from100 to 200 per unit for which quantity demanded is expected to fall from 200 to 100 unitsUsing the mid-polint formula. compute the price elasticity of demand for each brand.From your answer in i, what is the type and economic interpretatiom of each brand'sii.value of elasticity.
- You are working for the chiefeconomist at Microsoft. Microsoft’s only significantcosts to producing and distributing a new version itit’s operating system is $30,000 in wages to itsemployees, $15,000 in computer testing, and$5,000 in utilities. Microsoft’s marketing department estimates that thedemand a new version it it’s operating system is Q = 320 – 0.5 P, with Pmeasured in dollars.What price should Microsoft charge for a new version it it’s operatingsystem? What profit should Microsoft expect?Return to Figure 9.2. Suppose P0 is $10 and P1 is$11. Suppose a new firm with the same LRAC curve asthe incumbent tries to break into the market by selling4,000 units of output. Estimate from the graph what thenew firm’s average cost of producing output would be.If the incumbent continues to produce 6,000 units, howmuch output would the two firms supply to the market?Estimate what would happen to the market price as aresult of the supply of both the incumbent firm andthe new entrant. Approximately how much profit wouldeach firm earn?Suppose a perfectly competitive market for hotdog stands in New York City becomes monopolistically competitive when gourmet, discount, andethnic hot-dog retailers show up, making eachcart slightly different. If hot dogs from differentstands are now imperfect substitutes and there arenumerous carts in the city, compare the producerand consumer surplus and total social welfarebefore and after the change
- 1. It is 1908 and you are the CEO of Ford Motor Company. General Motors startedproducing cars this year and has quickly become your chief rival. Their recent entrance, as wellas your assembly line methods, allows you the advantage of producing cars faster and choosingyour output levels first. Assume the 1908 inverse demand function for cars is P = 3900 - Q(customers view cars as identical products at this point in time) and production costs are C(qi) =100qi. a. What is Ford’s profit-maximizing output level? GM's?b. What is the market equilibrium price?c. How much profit does each firm earn?d. As the assembly line is used by other firms, the first-mover advantage disappears (fast forward100 years to present day), and more firms have entered the market (e.g. FCA, Tesla, Hyundai,Toyota, Honda, etc.), what do you expect to happen to Ford’s profit (assume demand andcosts are the same)? Explain.e. From 1908 into the 1920s, Ford offered customers one car: the Model T. Further, Henry isfamous…A large share of the world supply of diamondscomes from Russia and South Africa. Suppose thatthe marginal cost of mining diamonds is constant at$1,000 per diamond and the demand for diamonds isdescribed by the following schedule:Price Quantity$8,000 5,000 diamonds7,000 6,0006,000 7,0005,000 8,0004,000 9,0003,000 10,0002,000 11,0001,000 12,000a. If there were many suppliers of diamonds, whatwould be the price and quantity?b. If there were only one supplier of diamonds, whatwould be the price and quantity?c. If Russia and South Africa formed a cartel, whatwould be the price and quantity? If the countriessplit the market evenly, what would be SouthAfrica’s production and profit? What wouldhappen to South Africa’s profit if it increased itsproduction by 1,000 while Russia stuck to thecartel agreement?d. Use your answers to part (c) to explain why cartelagreements are often not successful.(2) (Assume that s = 0 (there is no subsidy.)(a) Write down firm A’s profit function. (No work required.)(b) Find each firm’s best response function. (You may do this directly or by setting s to zero inyour expressions from (1b).(c) Solve for equilibrium outputs (q*A, q*B). You may either use the symmetry in this problem toassume a symmetric solution, or solve for firm B’s best response and solve the two best responsessimultaneously. (d) Solve for the equilibrium price.(e) Solve for the equilibrium profits.
- Suppose that Volkswagen hires a popular singer to adver-tise its compact automobiles. The campaign is very success-ful, and the company increases its share of the compact-car market substantially. What is Ford likely to do?A monopoly faces an inverse demand curve, p(y) = 100 − 2y, and has constant marginal costs of 20. What is its profit-maximizing level of output and price? What is the socially optimal price and output for this firm? (Perfectly competitive solution) What is the deadweight loss due to the monopolistic behavior of this firm? d. Show your work algebraically and graphically.Consider a town in which only two residents, Raphael and Susan, own wells that produce water safe for drinking. Raphael and Susan can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Price Quantity Demanded Total Revenue (Dollars per gallon) (Gallons of water) (Dollars) 3.60 0 0 3.30 35 $115.50 3.00 70 $210.00 2.70 105 $283.50 2.40 140 $336.00 2.10 175 $367.50 1.80 210 $378.00 1.50 245 $367.50 1.20 280 $336.00 0.90 315 $283.50 0.60 350 $210.00 0.30 385 $115.50 0 420 0 Suppose Raphael and Susan form a cartel and behave as a monopolist. The profit-maximizing price is _______ per gallon, and the total output is __________ gallons. As part of their cartel agreement, Raphael and Susan agree to split production equally. Therefore, Raphael's profit is , and Susan's profit is ___________ . Suppose that Raphael and…
