ime the pizza market is a perfectly competitive constant cost industry, and all firms have identica homogenous firms). The market demand and market supply functions for this perfectly competit stry are given below. L 0 1 2 3 4 5 6 7 8 9 9-TP = 0 10 20 30 40 50 60 70 80 90 TC 100 205 2.45 280 340 430 S45 720 930 1190 P = 30.5.005Q P = 1.7+.003Q TFC TVC 100 0 100 105 20.50 10.50 10.50 100 145 12.25 7.25 4.60 100 180 9.33 6.00 3.50 100 8.50 6.00 6.00 100 8.60 6.60 100 9.08 7.42 100 10.29 8.86 100 11.63 10.38 100 13.22 12.11 330 445 620 830 1090 ATC AVC MC 9.00 11.5 17.50 21.00 26.00

ime the pizza market is a perfectly competitive constant cost industry, and all firms have identica homogenous firms). The market demand and market supply functions for this perfectly competit stry are given below. L 0 1 2 3 4 5 6 7 8 9 9-TP = 0 10 20 30 40 50 60 70 80 90 TC 100 205 2.45 280 340 430 S45 720 930 1190 P = 30.5.005Q P = 1.7+.003Q TFC TVC 100 0 100 105 20.50 10.50 10.50 100 145 12.25 7.25 4.60 100 180 9.33 6.00 3.50 100 8.50 6.00 6.00 100 8.60 6.60 100 9.08 7.42 100 10.29 8.86 100 11.63 10.38 100 13.22 12.11 330 445 620 830 1090 ATC AVC MC 9.00 11.5 17.50 21.00 26.00

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter22: Getting Divisions To Work In The Firm’s Best Interests

Section: Chapter Questions

Problem 22.1IP

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Suppose Glen’s Grinders, LLC is a retail outlet that sells meat grinders for household use and operates in a perfectly competitive market where there is a total of 10 firms in this market including Glen’s Grinders. Basically, all the firms in this competitive market have technologies (production and cost conditions) that are the same as Glen’s. Suppose Glen’s total cost function is given by: C(q) =100 + 25q + q^2 a. Calculate Glen’s optimal output level and profits if the monthly market inverse demand for units of the product is stable and given by: P= 250 - Q b. If Glen is typical of the firms in this industry (same as the other 9), calculate the long-run equilibrium output, price, and profit level that will ultimately prevail in this industry.
total cost function for this market is TC = 500 + 10Q2 1. What are the profit-maximizing quantity, price, and profit for this market? 2. If there are two firms Atlas and Bowden in this market with the same earlier total cost function and they engage in Cournot competition, what is each firm's equilibrium quantity, price, and profit? [NB: round quantities to nearest integer to find equilibrium quantity, price, and profit] Is this a long run equilibrium? Why or why not?
Consider a competitive industry with a large number of firms, all ofwhich have identical cost functions c(y) = y2 + 1 for y > 0 and c(0) = 0. Supposethat initially the demand curve for this industry is given by D(p) = 52 − p.(a) What is the supply curve of an individual firm?(b) If there are n number of firms, what is the industry supply curve?(c) What is the smallest price at which the product can be sold?(d) Based on your answers to parts (a)-(c), explain in detail theequilibrium points based on the market activity with respect to the price, firmand industry.
Suppose that a perfectly competitive firm faces a market price of $7 per unit, and at this price the upward-sloping portion of the firm's marginal cost curve crosses its marginal revenue curveat an outpuut level of 1,400 units. If the firsm produces 1,400 units, it's average variable costs equal $6.50 per unit, and its average fixed costs equal $0.80 per unit. What is the firm's maximizing (or loss-minimizing output level? What is the amount of it's economic profits (or losses) at this output level?
onsider the table below and assume the market price is $35 per unit. Totalproduct Totalfixed cost TotalVariablecost 0 150 0 1 150 50 2 150 75 3 150 112.4 4 150 150 5 150 200 6 150 270 7 150 360 8 150 475 9 150 620 10 150 800 Now assume there are 600 identical firms in this industry, that is, there are 600 firms, each of which has the same cost data as the single firm discussed above. Suppose, too, that the demand curve for this industry is as follows: Price Quantitydemanded $20 6,800 30 5,975 45 5,500 60 5,125 75 4,500 95 4,200 120 3,600 150 2,400 In equilibrium each firm will realize: Multiple Choice an economic profit of $155. a loss of $45. an economic profit of $35. a loss of $135.
PakMonoG’s inverse demand function is P = 100 – 2Q and cost function is TC = 10 + 2Q, where Q is quantity in units and P price in PKR. Determine the profit-maximizing price, quantity and profit (or loss) of PakMonoG. Given your calculations in (a), illustrate the demand, marginal revenue and marginal cost curves of the firm in a graph. If we were to compare PakMonoG with a perfect competitive firm in the market, are there differences in characteristics of the two structures? What are welfare implications? Is total societal welfare of the firm higher or lower than that of a competitive firm? Support your answer using the graph in (b) above.
PakMonoG’s inverse demand function is P = 100 – 2Q and cost function is TC = 10 + 2Q, where Q is quantity in units and P price in PKR. Determine the profit-maximizing price, quantity and profit (or loss) of PakMonoG. Given your calculations in (a), illustrate the demand, marginal revenue and marginal cost curves of the firm in a graph. If we were to compare PakMonoG with a perfect competitive firm in the market, are there differences in characteristics of the two structures? (Maximum 150 words) What are welfare implications? Is total societal welfare of the firm higher or lower than that of a competitive firm? Support your answer using the graph in (b) above. (Maximum 150 words)
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.
Suppose there are 500 identicsl competitivd firms producing widgets and assume the total cost curve for each firm is given as, TC= 5q2+wq+10 and marginal cost is given as MC=10q + w where w is the widget maker's wage and q is the firm's output. If w=$50 what is the equation of the firms short run supply curve? 1) what is the average firm's profit (losses) at the new price of $61? 2) is the average firm in the short-run or long run? given it's profit(losses) should the firm continue to operate? 3) what would you predict, based on the perfectly competitive model of markets, will happen in this industry in the long run?
If the demand function faced by a firm is:Q = 90 – 2PTC = 2 + 57Q – 8Q2 + Q3 Determine the best level of output for the above question by the MR and MCapproach.Question 2: Determine the best level of output for a perfectly competitive firm that sells its product at P = $4 and faces TC = 0.04Q3– 0.9Q2 + 10Q + 5. Will the firm produce this level ofoutput? Why? Question 3: Suppose that the production function is given as follows:TPL = 10L + 5L2 + L3Find the total product, Marginal product and average product when L = 5. Question 4: Find the optimum level of output and profit from the cost functionTC = 50 + 6Q2 and price P = 100 – 4QAlso derive marginal cost and marginal revenue.
Assume that prior to the outbreak of the coronavirus (Covid-19), the natural gas industry was in Long Run Equilibrium (LRE). Using our side-by-side graph, depict the market equilibrium P0 and Q0, the optimal output of an individual firm representative of the other firms in the industry at this LRE (labeled as q0), and the individual firm’s profit if any. Provide a brief narrative explaining the setting and the profitability of an individual firm in an LRE (including why there is a certain level of profit in this setting). assume the natural gas industry is perfectly competitive, demand is downward sloping, supply is upward sloping, and production technology results in traditional U-shaped ATC and AVC curves. market price is always greater than the minimum of the AVC curve.
2) Cost functionsConsider 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?d- Suppose these two firms together act in a perfectly competitive manner. What is the price level in the case where these firms act perfectly competitively? What are the profits of the firms given perfectly competitive pricing?