Use the following information to answer questions 23-24 below. Suppose a representative perfectlycompetitive firm has the following cost function: TC= 100+ Q2. The short-run market demand and supplyare given by: QD = 100-P and Qs = P+20.23. How much output does the firm produce in the short run?a. Q=10b. Q=20c. Q=30d. Q=40e. Q=5024. How many firms operate in the market in the short-run?a. N=8b. N=6c. N=4d. N=3e. N=2

A perfectly competitive firm is a price taker, which means it takes the price set by the market…

Use the following information to answer questions 23-24 below. Suppose a representative perfectly competitive firm has the following cost function: TC= 100+ Q². The short-run market demand and suppl are given by: QD = 100-P and QS = P+20. 23. How much output does the firm produce in the short run? a. Q=10 b. Q=20 c. Q=30 d. Q=40 e. Q=50 24. How many firms operate in the market in the short-run?

Use the following information to answer questions 23-24 below. Suppose a representative perfectly competitive firm has the following cost function: TC= 100+ Q². The short-run market demand and suppl are given by: QD = 100-P and QS = P+20. 23. How much output does the firm produce in the short run? a. Q=10 b. Q=20 c. Q=30 d. Q=40 e. Q=50 24. How many firms operate in the market in the short-run?

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter9: Perfect Competition

Section: Chapter Questions

Problem 14QP

See similar textbooks

Similar questions

Firms in the market for soccer balls are selling in a purely competitive market. A firm in the soccer ball market has an output of 5,000 balls, which it sells for $10 each. At the output level of 5,000 the average variable cost is $6.00, the average total cost is $7.50, and the marginal cost is $10.00. What would you expect the firm to do in the short run? Why? What would you expect the market to do in the long run? Why?
Firms in the market for dog food are selling in a purely competitive market. A firm producing dog food has an output of 10,000 pounds of dog food, for which it sells for $0.50 a pound. At the output level of 10,000 pounds the average variable cost is $0.40, the average total cost is $0.70, and the marginal cost is $0.50. What do expect will happen in the long-run? Explain.
Can you help with parts d,e and f please? A perfectly competitive firm has the following total cost function: TC = 4,500 + 2q + .0005q2 where TC is total cost in dollars and q is the quantity of output produced. a. Assume this perfectly competitive market consists of 800 firms with cost structures identical to the one above. What is the equation for the market supply curve? Assume the market demand curve is: Qd = 5,600,000 – 400,000P where Qd is the quantity demanded in the market and P is the commodity’s price in dollars. b. What is the market’s equilibrium price? c. Assuming the market is in equilibrium, using marginal revenue and marginal cost determine the firm’s profit-maximizing quantity of output? What does the profit-maximizing firm’s total economic profit equal? Assume the total cost function above: TC = 4,500 + 2q + .0005q2 is associated with the short-run total cost function that corresponds to the minimum point on the long-run average total cost curve and this is a…
The graph below shows a perfectly competitive firm in short run equilibrium, where the firm has chosen the output level maximizing its profit. Consider the level of profits being earned here, and what will happen over time. What will happen in the long run? Note that the horizontal demand curve, D1, is also equivalent to marginal revenue and price. Group of answer choices The market price will increase causing economic profits to increase Demand will increase causing economic profits to increase The market price will decrease until economic profit is zero
Q94 A perfectly competitive firm is currently producing an output level where price is $10.00, average variable cost is $6.00, average total cost is $10.00 and marginal cost is $8.00. To maximise profits, this firm should... a. Increase its output. b. Increase the market price. c. Decrease its output. d. Produce zero output. e. Not change its output.
The market for drones is perfectly competitive. Assume for simplicity that fractions of everything, including number of firms, is possible. We have identical firms, each with a Total Cost curve of TC=862+q^2 and Marginal Cost curve MC=2q. Market demand is Q=856-2P. What is the number of firms in the market in the long run equilibrium?
Consider a competitive firm with a short-run cost function C(q)=100q-q^2+(1/5)q^3+450(a) Suppose that the market price is $205. Find the optimal output. Find the profitor loss at the optimal output. Will the firm stay or shutdown? Why?(b) Suppose that the market price is $105. Find the optimal output. Find the profitor loss at the optimal output. Will the firm stay or shutdown? Why?(c) Suppose that the market price is $205 and there is a tax of $65 per unit produced. Find the optimal output. Find the profit or loss at the optimal output. Will the firm stay or shutdown? Why?
Suppose you are given the following information about a particular industry: QD = 6500 – 100P Market Demand QS = 1200P Market Supply TC(q) = 722 + q2/200 Individual firm’s total cost function MC(q) = q/100 Individual firm’s marginal cost function Assume that all firms are identical and that the market is characterized by perfect competition. Find an individual firm’s supply curve. How many firms are there currently in the market? Find the equilibrium price and equilibrium market quantity. How much is output supplied by each firm, and how much profit does each firm make in the short run? Would you expect to see entry into or exit from the industry in the long run? Explain. What effect will entry or exit have on the market equilibrium? Find the long-run equilibrium price, the number of firms, and the amount of output each firm produces in the long run.
Will a profit-maximizing firm in a competitive market ever produce a positive level of output in the range where the marginal cost is falling? Give an explanation.
Suppose that as the output of mobile phones increases, the cost of touch screens and other component parts decreases. If the mobile phone industry features pure competition, we would expect the long-run supply curve for mobile phones to be: a. Upward sloping. b. Downward sloping. c. Horizontal. d. U-shaped.
A perfectly competitive firm sells its good for $20. If marginal cost is four times the quantity produced, how much does the firm produce? Why? Assuming perfect competition, there is not enough information to determine how much the firm is producing. Assuming perfect competition, the firm is producing where MC is twice MR. If the price is $20, then MC is $40. This means that the firm is producing 10 units. Assuming perfect competition, the firm is producing where MR = MC. If the price is $20 and MC is four times the quantity, it is producing 80 units. Assuming perfect competition, the firm is producing where MR = MC = P. Since price is $20, MR is $20. If MC is 4 times the quantity, it is producing 5 units.
What is the formula for profit maximization by firm ? Why does this result in the marginal cost curve becoming the same as the supply curve for firms in perfect competition? what is the difference between the short run and long run ? Why does this difference matter in our discussion of firm behavior?