FIGURE 12.1 The purely competitive seller's demand for a resource. The MRP curve is the resource demand curve; each of its points relates a particular resource price (= MRP when profit is maximized) with a corresponding quantity of the resource demanded. Under pure competition, product price is constant; therefore, the downward slope of the D = MRP curve is due solely to the decline in the resource's marginal product (law of diminishing marginal returns). P $14 12 10 8 4 2 D = MRP 2 3 4 5 6 7 8 2 Quantity of resource demanded Resource price (wage rate) 6. TABLE 12.1 The Demand for Labor: Pure Competition in the Sale of the Product (6) Marginal Revenue Product (MRP) (1) (2) Total Product (3) Marginal Product (MP) (4) Product (5) Total Revenue, Units of Resource (Output) Price (2) x (4) $2 $ 0 -7 $14 2 6 12 13- 18 2 26 -5 10 3 36 -4 4 22 2 44 3 5 25 2 50 -2 4 2 54 2 28 56 2. 67

FIGURE 12.1 The purely competitive seller's demand for a resource. The MRP curve is the resource demand curve; each of its points relates a particular resource price (= MRP when profit is maximized) with a corresponding quantity of the resource demanded. Under pure competition, product price is constant; therefore, the downward slope of the D = MRP curve is due solely to the decline in the resource's marginal product (law of diminishing marginal returns). P $14 12 10 8 4 2 D = MRP 2 3 4 5 6 7 8 2 Quantity of resource demanded Resource price (wage rate) 6. TABLE 12.1 The Demand for Labor: Pure Competition in the Sale of the Product (6) Marginal Revenue Product (MRP) (1) (2) Total Product (3) Marginal Product (MP) (4) Product (5) Total Revenue, Units of Resource (Output) Price (2) x (4) $2 $ 0 -7 $14 2 6 12 13- 18 2 26 -5 10 3 36 -4 4 22 2 44 3 5 25 2 50 -2 4 2 54 2 28 56 2. 67

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 6SCQ: A firms marginal cost curve above the average variable cost curve is equal to the films individual...

See similar textbooks

Similar questions

Suppose that each firm in a competitive pizza market has the following identical cost: Total cost: TC=25+1.5Q2 Formulate the equation or level of fixed cost, variable cost, marginal cost, average variable cost (AVC) and average total cost (ATC) for each firm. Sketch a diagram to illustrate average total cost (ATC) and marginal cost (MC) for Q from 1 to 20. Identify the quantity at which the average total cost (ATC) reaches its minimum and interpret its economic or business implication. An innovation was diffused widely among all firms in the market. Adoption of this innovation will help to reduce 20% of the variable cost for any given level of production while all other factors remain the same. A firm needs to pay a fee of $5 to adopt the innovation. Formulate the new production cost functions (TC, TFC, TVC, ATC and MC) for each firm.
Distinguish between how the marketreacts to a temporary difference in prices for the same resourceand how the market reacts to a permanent difference for similarresources. Why do the reactions differ?
COURSE: MICROECONOMICS - Bertrand's ModelAssume that a market is supplied by 2 companies, whose total costs are: CTi = 100Respective demand of each is: q1 = 120 - 2p1 + p2 and q2 = 120 - 2p2 + p1It is requested to:(a) calculate the firms' profit and reaction function.(b) plot the market equilibrium price and reaction function(d) calculate equilibrium quantity produced by each firm(e) determine profits that both firms will have at equilibrium.
A firms marginal cost curve above the average variable cost curve is equal to the films individual supply curve. This means that every time a firm receives a price from the market it will be willing to supply the amount of output where the price equals marginal cost. What happens to the films individual supply curve if marginal costs increase?
A textile firm in a competitive industry employs a particularly efficient manager torun the operations at its production facility. In the textile industry, a plant managertypically makes a salary of $4,500 per month. The textile firm employing thesuperior manager faces the LAC and LMC curves shown in the figure below. Inlong-run competitive equilibrium, the price of the product is $9 A- typical textile firm in this competitive industry has a minimum long-runaverage cost of $______. The typical textile firm earns economic profit of$______ B-The textile firm with the superior plant manager could earn economic profitof $___________ per month, if no rent is paid to the superior manager C-The superior plant manager is likely to earn a salary of $______ per month,$____________ of which is economic rent
11 7. Suppose that for some reason we were interested in studying solutions to the following problem: A firm produces a single output y from N inputs x = (x1 , • • • , xN) . The firm is given a certain budget that it can spend on inputs, and the firm produces as much output as it can given that budget. Letting B be the budget and supposing the firm is described by a production function f (x ) and that the firm is competitive and faces factor prices w, we can define y* (w, B) = max{f (x) :w ·x ::.; B}. Devise a theory concerning this problem in the spirit of the results we have given concerning partial derivatives of y* and solutions to the problem just posed.
Suppose the inverse demand function for a depletable resource is linear, P = 25 – 0.4q, and the marginal supply cost is constant at £5.i. If 40 units are to be allocated between two periods in a dynamic efficient allocation, how much would be allocated to period 1 and how much to period 2 when the discount rate is r = 0.15? Show your working ii. What is the marginal user cost in each period? Provide a one-sentence economic interpretation iii. Show in a diagram how the marginal user cost would change if an energy price shock were to raise the marginal cost in period 2 to £10
Suppose that each firm in a competitive industry has the following as the Total cost: TC=50+ ½q2 Where q is an individual firm’s quantity produced. The market demand curve for this product is Demand: Q = 120 – P Where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market What is each firm’s fixed cost? What is its variable cost? At what quantity efficiency of scale would be achieved? Give the equation for each firm’s supply curve Give the equation for the market supply curve for the short run What is the equilibrium price and quantity for this market in the short run? In this equilibrium, how much does each firm produce? Is there incentive for firms to enter or exit? In the long run with free entry and exit, what is the equilibrium price and quantity in this market? In the long-run equilibrium, how many firms are in the market?
Suppose that each firm in a competitive industry has the following as the Total cost: TC=50+ ½q2 Where q is an individual firm’s quantity produced. The market demand curve for this product is Demand: Q = 120 – P Where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market What is each firm’s fixed cost? What is its variable cost? At what quantity efficiency of scale would be achieved? Give the equation for each firm’s supply curve Give the equation for the market supply curve for the short run What is the equilibrium price and quantity for this market in the short run? In this equilibrium, how much does each firm produce? Is there incentive for firms to enter or exit? In the long run with free entry and exit, what is the equilibrium price and quantity in this market? In the long-run equilibrium, how many firms are in the market? I want the subparts 4,5,6 to be solved. Thank you
Suppose that each firm in a competitive industry has thefollowing costs: Total cost: TC=50 + 1/2q^2 Marginal cost: MC=q where q is an individual firm’s quantity produced. The marketdemand 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 firm’s fixed cost? What is its variable cost?Give the equation for average total cost. b. Graph average total cost curve and the marginal cost curvefor q from 5 to 15. At what quantity is average total cost curve atits minimum? What us marginal cost and average total cost at thisquantity? c. Give the equation each firm’s supply curve. d. Give the equation for the market supply curve for the shortrun in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market inthe short run? f. In this equilibrium, how much does each firm produce?Calculate each firm’s profit or loss. Is there incentive for…
Suppose that the monthly market demand schedule for Frisbees is: Price $8 $7 $6 $5 $4 $3 $2 $1 Quantity Demanded 100 200 400 800 1,600 3,200 6,000 15,000 Suppose further that the marginal and average costs of Frisbee production for every competitive firm are Rate of Output 10 20 30 40 50 60 Marginal Cost $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 Average Cost $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 Finally, assume that the equilibrium market price is $5 per Frisbee. (a) How many Frisbees are being sold in equilibrium? (b) How many (identical) firms are initially producing Frisbees? (c) How much profit is the typical firm making? (d) In view of the profits being made, more firms will want to get into Frisbee production. In the long run, these new firms will shift the market supply curve to the right and push the price down to average total cost, thereby…
Based on market research, a film production company in Ectenian obtains the following information about the demand and production costs of its new DVD:Demand: P = 1,000 – 10QTotal Revenue: TR = 1,000Q – 10Q2Marginal Revenue: MR = 1,000 – 20QMarginal Cost: MC = 100 + 10Qwhere Q indicates the number of copies sold and P is the price in Ectenian dollars.d. Suppose, in addition to the costs above, the director of the film has to be paid. The company is considering four options:i. A flat fee of 2,000 Ectenian dollarsii. 50 percent of the profitsiii. 150 Ectenian dollars per unit soldiv. 50 percent of the revenueFor each option, calculate the profit-maximizing price and quantity. Which, if any, of these compensation schemes would alter the deadweight loss from monopoly? Explain