EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 12, Problem 12.10P
a)
To determine
To Calculate: the typical firm’s supply curve, the market supply curve and the
b)
To determine
To Calculate: the demand curve facing the price leader.
c)
To determine
the profit to be maximized, number of quantities of the product to be produced by the price leader and also prevailing the price and quantity in the market.
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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.
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…
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?
Chapter 12 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 12.2 - Prob. 1TTACh. 12.2 - Prob. 2TTACh. 12.2 - Prob. 1MQCh. 12.2 - Prob. 2MQCh. 12.2 - Prob. 1.1TTACh. 12.2 - Prob. 2.1TTACh. 12.2 - Prob. 1.1MQCh. 12.3 - Prob. 1MQCh. 12.3 - Prob. 2MQCh. 12.3 - Prob. 1TTA
Ch. 12.3 - Prob. 2TTACh. 12.3 - Prob. 1.1MQCh. 12.3 - Prob. 2.1MQCh. 12.3 - Prob. 1.1TTACh. 12.3 - Prob. 2.1TTACh. 12.4 - Prob. 1TTACh. 12.4 - Prob. 2TTACh. 12.5 - Prob. 1MQCh. 12.5 - Prob. 2MQCh. 12.5 - Prob. 1TTACh. 12.5 - Prob. 2TTACh. 12.6 - Prob. 1MQCh. 12.6 - Prob. 2MQCh. 12 - Prob. 1RQCh. 12 - Prob. 2RQCh. 12 - Prob. 3RQCh. 12 - Prob. 4RQCh. 12 - Prob. 5RQCh. 12 - Prob. 6RQCh. 12 - Prob. 7RQCh. 12 - Prob. 8RQCh. 12 - Prob. 9RQCh. 12 - Prob. 10RQCh. 12 - Prob. 12.1PCh. 12 - Prob. 12.2PCh. 12 - Prob. 12.3PCh. 12 - Prob. 12.4PCh. 12 - Prob. 12.5PCh. 12 - Prob. 12.6PCh. 12 - Prob. 12.7PCh. 12 - Prob. 12.8PCh. 12 - Prob. 12.9PCh. 12 - Prob. 12.10P
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