Suppose that a market consists of 300 identical firms, all with the same cost curve: TC(4) = 0.1 + 150g?. The market demand is given by Qd(p) = 60 - p (a) What is the equilibrium price and quantity? (b) What quantity must each firm produce and sell at equilibrium? (c) Do firms make positive profits in the market equilibrium?
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Suppose that a market consists of 300 identical firms, all with the same cost curve: TC(4) = 0.1 + 150g?. The market demand is given by Qd(p) = 60 - p (a) What is the
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- 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.5. The market demand for leather handbags is given by the function P = 75 - 1.5Q. P is priceper handbag, and Q is output per time period.The market supply is given as P = 25 + 0.50Q. A typical competitive firm that markets thistype of bag has a marginal cost of production of MC = 2.5 + 10q. [4]a) Calculate the market equilibrium price for the bags as well as the output rate in themarket.b) Calculate how much the typical firm will produce per time period at the equilibriumprice.c) If all firms had the same cost structure, how many firms would compete at theequilibrium price computed in (a) above?Suppose that fixed costs for a firm in the automobile industry (start-up costs of facto-ries, capital equipment, and so on) are $5 billion and that variable costs are equal to$17,000 per finished automobile. Because more firms increase competition in themarket, the market price falls as more firms enter an automobile market, or specifi-cally, P = 17,000 + (150/n), where n represents the number of firms in a market.Assume that the initial size of the U.S, and the European automobile markets are 300million and 533 million people, respectively.a. Calculate the equilibrium number of firms in the U.S. and European automobilemarkets without trade.b. What is the equilibrium price of automobiles in the United States and Europe if theautomobile industry is closed to foreign trade?c. Now suppose that the United States decides on free trade in automobiles withEurope. The trade agreement with the Europeans adds 533 million consumers tothe automobile market, in addition to the 300 million in the…
- Suppose a stream is discovered whose water has remarkable healing powers. You decide to bottle the liquid and sell it. The market demand curve is linear and is given as follows: P = 53 - Q. The marginal cost to produce this new drink is $5. What price would this new drink sell for if it sold in a competitive market? A. 0 B. $5 C. $29 D. $17Suppose that each firm in a competitive industry has thefollowing costs: Total cost: TC=50 + 1/2q^2 Marginal cost: MC=q where q is an individual firm’s quantity produced. The marketdemand curve for this product is Demand: QD = 120 – P where P is the price and Q is the total quantity of the good.Currently, there are 9 firms in the market. a. What is each firm’s fixed cost? What is its variable cost?Give the equation for average total cost. b. Graph average total cost curve and the marginal cost curvefor q from 5 to 15. At what quantity is average total cost curve atits minimum? What us marginal cost and average total cost at thisquantity? c. Give the equation each firm’s supply curve. d. Give the equation for the market supply curve for the shortrun in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market inthe short run? f. In this equilibrium, how much does each firm produce?Calculate each firm’s profit or loss. Is there incentive for…c) Assume that the market price for bagel services is 42 and store produces 30 units of the bagel. Calculate theprofit level. Is the store profit maximizing? Explain your answer. d) Go back to part c) and assume that there are 100 identical bagel store in the market. Determine the market supply curve. (You will obtain total market quantity, Q, as a function of price,P). Are elasticities of individual firm supply and market supply curves different? e) Given the market supply curve you have calculated in part d), now assume that market demand forhairdressers are given by Q=2900-50P. Find the equilibrium price and quantity in the market. Does the marketequilibrium correspond to long-run equilibrium? Explain
- A firm has the following total costs, where Q is output and TC is total cost: QTC0$ 1001110213031604200525063107380846095501065011760 Say the firm is in a perfectly competitive market. If the current market (equilibrium) price is $ 70, at what output level will the firm as a profit maximizer produce at? Say the market price rises to $ 100. At what output level (as a perfect competitor) will this produce at? How much profit is the firm making at a price of $90? Based on this calculation, do you expect firms to enter or leave this market? Say instead this firm is a monopoly. If the firm maximizes profit at an output level where marginal revenue equals $ 80, what output level will this be?Suppose that the market for chicken momos is perfectly competitive with ten firms producing momos. Tasty treat is one of the ten price-takers in the market for momos. The accompanying tables show the demand schedule for momos in Dhaka and cost schedule for "Tasty Treat". DEMAND SCHEDULE Price (BDT per plate) Quantity demanded (plate per hour) 10 900 25 675 30 600 40 450 50 300 70 0 COST SCHEDULE OF TASTY TREAT Output (plate per hour) Marginal Cost (BDT per extra plate) Average Variable Cost (BDT per plate) Average total cost (BDT per plate) 40 20 25 90 50 10 10 75 60 30 20 55 70 50 23 50 80 70 35 60 90 85 50 77 a) What is the value of the shut-down price and break-even price for Tasty Treat?How did you figure that out?b) Write down the individual supply schedule of chicken momos for Tasty Treat and the industry supply schedule for chicken momos.c) Plot the market demand and supply curves for chicken momos and find the equilibrium price and…1. Mzanzi-Ndizvo (Pty) is a vaccine manufacturing company that has the following costs ofproduction. Cost of capital is R50 000, labour cost is R30 000, and the total cost the firm is willing to pay is R300,000. Identify the type of this production function and Illustrate it with a 2D graph. 2. If the demand and supply curve for cell phones is given by: D = 80 - 4P, S = 40 + 6P In a market with a price of P for smartphones, compute the number of phones that would be bought and sold at equilibrium.
- In a competitive market, the current equilibrium price is $110 per unit. A firm that produces Q units ofoutput in this market has a short-run Total Cost (TC) given by TC = 300 + 10Q + 5Q2. What is the marginal cost for this firm? How many units should the firm produce per day?An industry currently has 100 firms, each of which has fixed cost of $16 and averagevariable cost as follows:Quantity Average Variable Cost1 $ 12 23 34 45 56 6a. Compute a firm’s marginal cost and average total cost for each quantity from 1 to 6.b. The equilibrium price is currently $10. How much does each firm produce? What isthe total quantity supplied in the market?c. In the long run, firms can enter and exit the market, and all entrants have the samecosts as above. As this market makes the transition to its long-run equilibrium, willthe price rise or fall? Will the quantity demanded rise or fall? Will the quantitysupplied by each firm rise or fall? Explain your answers.What is the marginal revenue for the following: qty: 100, 200 Price:39750, 39500 Revenue:3975000, 7900000 Total Cost: 2000000,4000000 Profits: 1975000,3900000 Marginal Revenue ___?, ___? Suppose that managers at Honda are deciding how to price the new Honda Accord. The managers estimate that their total costs increase by $20,000 for each car they produce. They also estimate the demand curve they face; it is described by the equation: Q = -0.4 P + 16,000, where Q represents the quantity of Honda Accords they will sell and P represents the price they charge in US dollars. We can re-write that demand curve as: P = 40,000 - 2.5 Q. Take every possibly quantity that the managers might choose between 0 and 7,000 in units of 100. For each possible quantity, calculate the associated price the managers would need to charge, the revenue they would earn, and the total costs. You can then calculate profits for each level of quantity. Highlight the cell that contains the highest value of profit.…
