Question 15 In what case might a single seller be preferred to a competitive market? O If the single seller can offer the good at a lower price than if there were many firms If the single seller has a patent on the good Competition is always better than a single seller O If the single seller donates enough of its profits to charity
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- Max barbershop is considering raining prices by $5 per haircut. Their current price for a cut is $23 abd babers receive 50% of the revenues for each haircut. Since Max is concerned about demand dropping due to the price increase, he is also planning to start advertising the shop on TV for $895 month. If current fixed cost are $11,576/month the current profit is $2000/month by what percent can demand decrease at the new price level and maintain current levels of profit on the business?No written by hand solution Suppose that headphones can be produced at a constant marginal cost. Headphone A is priced at $20 and headphone B is priced at $30. (a) If the Lerner index of headphone A divided by the Lerner index of headphone B is 0.5, what is the marginal cost of producing headphones? (b) Using your answer to part ‘a’, what is the elasticity of demand of headphone A? What is the elasticity of demand of headphone B?Output Quantity (Milk in Liters) Total Revenue ( in Rupees) Total cost ( in Rupees) 0 0 30 1 80 50 2 160 80 3 240 120 4 320 170 5 400 230 6 480 300 7 560 380 8 640 470 Calculate Profit, Marginal cost and change in Profit. What output quantity of milk maximizes profit for Farm Fresh Diary? Suppose a tax of Rs.20 is imposed and government fixes price of milk at Rs.80 a liter. Then what should be strategy of Farm Fresh Diary?
- The Android phone market is highly competitive since there is a large number ofcompanies and potential entrants. For simplicity, assume each firm has an identical coststructure, and the cost does not change with new firms’ entry. Each firm’s long-run average costis minimized at 300 and the minimum average cost is $150 per unit. Total market demand isgiven byQ = 15,000 − 50P.a. What is the Android phone market’s long-run supply curve? b. What is the long-run equilibrium price (P∗) and total industry output (Q∗)? Howmany companies are competing in this market?c. The short-run total cost curve for each firm is given by STC = 0.5q^2 − 150q +20000, where q is the firm’s production quantity. Find the short-run marginal cost(SMC) for each firm. What is the market short-run supply curve?d. Suppose Android phone has become more popular and the market demandcurve shifts outward to Q = 20,000 − 50P. In the *short-run*, find the new equilibriumprice. What is the new equilibrium price in…2. In the problem of double marginalization, the resulting price is ______than if the manufacturer and the retailer were to merge a. Higher b. Lower c. The same d. None of the above*1 A small village has only one Italian restaurant. The daily demand for dinners in this restaurant is P=120-2Q, where P is the price in £ and Q is the number of dinners. It has a fixed cost of £300 and a marginal cost of £10 for the first 15 dinners. If it wants to produce more than 15 dinners, it must pay overtime wages to its workers, with the marginal cost rising to £20. What is the maximum amount of profit the restaurant can earn? Illustrate your answer on a diagram.
- The handmade snuffbox industry is composed of 100 identical firms each having short-run total costs given by , where q is the output per day.20.5105STCqq=++(a) What is the short-run supply curve for each firm? What is the short-run supply curve for the market?(b) Suppose the demand is given by . What will be the equilibrium (both quantity and 110050QP=-price) in this marketplace? (c) What will each firm’s short-run profits be?Consider a perfectly competitive market for apples, with the following demand and supply equations: D: P = 2,000 – Qd S: P = Qs – 1,990 equilibrium price: $5 equilibrium quantity: 1995 A farmer, Jodi, faces the following marginal cost: MC = q – 2, and is making profit in the shortrun. What is the equilibrium price and quantity for farmer Jodi?Profit equals revenue minus cost. We have looked at costs. We now turn to revenue. Let us assume that firm S is a price In other words, it faces a (i) downward-sloping / horizontal (ii) demand curve / supply curve (Delete as appropriate.) Let us assume that it faces a market price of £2 per unit for its product. What is its total revenue from selling: (i) 5 units? ................................ (ii) 8 units? ................................ (c) What shape is its total revenue curve? ....................................................................................... (d) What will be its marginal revenue from selling: (i) the fifth unit? ................................ (ii) the eighth unit?…
- Figure 12-6 Price (dollars per pound) 5 Market price 4 3 2 0 10 20 30 MC ATC D = MR 40 Quantity (thousands of pounds) Figure 12-6 shows the demand, marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples. Refer to Figure 12-6. Which of the following statements is true? O Jason cannot earn a profit from selling any number of apples. O Jason should produce where MC equals $3 (point d) where he will maximize his profit. O Jason should produce where MC equals $3 (point d) where he will minimize his losses. Jason should produce where the distance between MC and his demand curve is greatest (point b).c) Assume that the market price for bagel services is 42 and store produces 30 units of the bagel. Calculate theprofit level. Is the store profit maximizing? Explain your answer. d) Go back to part c) and assume that there are 100 identical bagel store in the market. Determine the market supply curve. (You will obtain total market quantity, Q, as a function of price,P). Are elasticities of individual firm supply and market supply curves different? e) Given the market supply curve you have calculated in part d), now assume that market demand forhairdressers are given by Q=2900-50P. Find the equilibrium price and quantity in the market. Does the marketequilibrium correspond to long-run equilibrium? ExplainTrue oe False: If the pandemic causes firms in a competitive industry to spend $100,000 per month on safety measures (regardless of the output level), the firms bear this cost in the short-run, but consumers bear it in the long-run.